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PURCHASING 

PRINCIPLES  AND  PRACTICES 


PURCHASING 

PRINCIPLES  AND  PRACTICES 


BY 

JOHN  C.  DINSMORE,  Ph.B. 

PURCHASING  AGENT  OF  THE   UNIVERSITY  OF  CHICAGO;   LECTURER  ON   PURCHASING   AT 
THE  UNIVERSITY  OF  CHICAGO  AND  NORTHWESTERN   UNIVERSITY;   SECRETARY 
AND    TREASURER    OF    THE    PURCHASING    AGENTS    ASSOCIA- 
TION OF  CHICAGO 


4  4  3  9 ;: 


New  York 

PRENTICE-HALL,  Inc. 

1922 


Copyright,   1922,  by 
Prentice-Hall,  Inc. 

Printed  in  the   United  States  of  America 
All  Riff  fits  Reserved 


-31 
61    . 


DEDICATED  TO 

THE  PURCHASING  AGENT 

THIS  BOOK  WAS  WRITTEN  IN  THE  HOPE  THAT  THE 
PURCHASING  AGENT  OF  TODAY  AND  TOMORROW  MAY 
FIND  IT  OF  SERVICE  IN  HIS  DAILY  ATTEMPT  TO  MAKE 
THE  DOLLARS  HE  SPENDS  WORK  HARDER  AND  MORE 
EFFICIENTLY. 


CONTENTS 

CHAPTER 

I.  Introduction  and  Sources  of  Information 

The  need  for  study;  Technique  of  other  professions;  Skeleton  of 
requirements  only;  Some  succeed  without  study;  No  advancement 
without  labour;  How  library  may  serve  the  purchasing  agent;  Some 

rrj  examples;  How  to  find  the  material  needed;  How  to  read;  Types 

(«a  of  authors. 

V 


II.  Factors  In  Price  Changes 


Theory  of  prices;  Supply  and  demand;  An  illustration;  Buyer  must 
consider  all  the  facts;  The  pendulum  swing  of  prices;  Individual 
Items  may  be  uneven;  Buyers  must  not  gamble;  Business  cycles; 
Law  of  substitution;  Demand  may  be  fictitious;  Purchasing  agent 
^1  must  be  able  to  make  an  intelligent  guess. 

III.  A  Typical  Purchasing  Department  .      .        15 

The  waggon-maker  begins;  He  needs  more  funds;  The  first  general 
office  man;  The  overshipment  and  its  sequel;  The  delayed  shipment 
and  the  remedy;  The  system  is  improved;  Stock  records  and  per- 
petual inventory;  The  purchasing  agent  emerges;  His  opportunities 
and  temptations;  The  automobile  factory  equipment;  Special 
routine ;  Cash  discounts ;  The  system  changes  as  requirements 
change;  Some  purchases  do  not  follow  the  general  rules;  Illus- 
tration; The  combine  and  the  problems  of  the  general  purchasing 
agent;  The  system  enthusiast;  The  grouch;  The  fussy  buyer; 
The  "good  fellow";  The  buyer  who  shirked  detail;  The  buyer 
with  family  difficulties ;  The  committee  of  experts. 

IV.  Qualifications  for  Success 33 

Knowledge;  Honesty;  Self-control;  A  liking  for  people;  Ability  to 
keep  his  own  council. 

V.  The  Ethics  of  the  Profession    .      .      .      .      ,       37 

Definitions;  Some  lag  behind;  Sales  tactics;  Department  of  justice 
acts;  Liars  will  come  to  grief;  Inside  information ;  Confidential  bids. 

VI.  The  Mechanics  of  the  Profession     ...       41 

The  importance  of  routine  often  over-emphasized ;  Necessary  routine 
is  simple;  Request  to  purchase;  Quotation  file;  Purchase  order; 
Order  index;  Accounts  payable  sheets;  Two  typical  systems  com- 
pared. 

vii 


viii  CONTENTS 


VII.  Modern  Catalogues  and  Files     ....       63 

Vertical   file;   Open   shelves   alphabetically;    Open   shelves  numeri- 
cally; According  to  size;  A  combination  plan. 

VIII.  Relation  to  Other  Departments     ...       66 

Relation   to  production;   Factory  superintendent;   Credit  manager; 
Stores;  Accounting;  Sales  force. 


^5 


.  The  Function  of  Specifications   ....       74 

Drafting   specifications ;    Buying   by   specification ;    advantages   and 
disadvantages;  A  practical  test  for  paint. 


X.  Testing  of  Materials 78 

Importance  of  tests;  Specific  cases;  Inspection  must  be  continuous; 
Tests  in  actual  practice. 

XI.  Stores  Equipment  and  Functions      ...       81 

Distance  from  source  of  supply  as  a  cost  factor;  Physical  equip- 
ment; Shelving;  Vertical  bins  for  heavy  parts;  Stores  records. 

XII.  Purchase  and  Care  of  Office  Equipment  .       86 

Purchase  of  pencils,  pens,  ink,  carbon  paper,  etc.;  Care  and  issue  of 
these  supplies;  Desks  and  chairs;  The  purchase  of  stationery  and 
printed  forms. 

XIII.  Budget    Control    of    Purchases    by    De- 

tailed Estimates 94 

The  modern  viewpoint;  Income;  Sales  quotas;  Production  budgets; 
Purchase  budgets;  The  flexible  budget  system;  Typical  examples; 
University  budget  system  in  detail ;   Bibliography. 

XIV.  Problems  In  Purchasing  Lumber      .      .      .     Ill 

Difficulties  and  pitfalls;  Species  of  trees  and  variations  due  to  en- 
vironment of  individual  trees;  Heart  and  sap  wood;  Railroad  ties 
treated  and  untreated;  Aids  offered  by  lumber  associations  and 
Government  bureaus;  Bibliography. 

XV.  Paper         116 

Importance  of  the  industry;  Equipment  of  the  buyer;  Constituents 
of  paper;  Manufacture;  Kinds  of  paper;  Reforms  in  trade  customs; 
Mill  brands  vs.  jobbers'  brands;  Selecting,  ordering  and  inspecting 
paper;   Testing  of  paper;   Paper  trade;  Trade   Customs;   Bibliog- 
raphy. 

XVI.  Paper  Supplies  Used  In  Creamery  Industry     139 

Development  of  modern  creamery  methods;  Better  butter  for  less 
cost;   Parchment  paper  printed   and   plain;   Cartoons;   Waxed   and 
plain;  Storage  of  wax  paper;  Hand  wrapping  and  machine  wrap- 
ping; Stitched  vs  sealed  packages;  Other  supplies. 


CONTENTS  ix 

CHAPTER  PAGE 

XVII.  Purchasing  Automobile  Tires   ....      145 

Finding  the  best  tire  for  your  purpose;  Rubber  Fabric;  Manufac- 
turing processes ;   Cords  vs.  fabrics. 

XVIII.  Textile  Purchasing  Difficult     .      .      .      150 

A  simple  test;  The  linen  glass;  Tensile  strength;  Special  factors; 
Heat  conductivity;  No  objection  to  shoddy;  Costs;  Buyer  must 
know;  Change  sources  only  when  necessary;  Two  ways  to  lose 
money, 

XIX.  The  Purchase  of  Advertising   .     .     .     .     156 

Peculiarities  of  the  problem;  Buying  space;  A  tj'pical  advertising 
campaign;  The  plan;  Educational  work;  Circularizing;  Trade 
papers;   Sales  force;   Coupons;  Telephone  canvass;   Billboards. 

XX.  Problems  in  Copper  and  Brass     .      .      .      .      165 

Historical  sketch;  Producing  regions;  Electrolytic  copper  and  lake 
copper;  Slag;  Impurities;  Copper  wire  specifications;  Sales 
methods;  Sheets;  Tubes;  Alloys;  Brass;  Season  cracking. 

XXI.  Purchase  of  Machinery  and  Mine  Equip- 

ment   174 

Quality  must  come  first;  Rock  drills;  Nature  of  the  work;  Speed; 
Cost  and  upkeep;  Weight  of  machine;  Simplicity  of  operation; 
Opportunities  for  demonstrations;  Hoisting  engines;  Careful  study 
necessary;  Gears;  Drums;  Ropes;  Cages;  Clutch;  Brakes;  Lathes; 
Pointers  for  the  buyer. 

XXII.  Coal  for  Steam  or  Heating       ....     183 

First  steps;  Steam  coals;  Handling  charges;  Storage;  Transporta- 
tion; Juggling  freight  rates;  The  first  choice;  Carelessness  and 
thefts;  How  a  shortage  was  discovered;  Long  and  short  ton;  Dry 
and  as  received  analysis;  Sampling;  Moisture;  Ash;  Volatile;  Fixed 
carbon  sulphur;  Heat  value;  Analysis  interpreted;  Smokeless  coals; 
Coal  grades  and  coal  ranks;  Bibliography. 

XXIII.  Coal  Analysis  a  Guide  Only    ....      194 

Guide  only;  Sampling;  Some  interesting  charts  and  their  explana- 
tion ;   Some   analysis  comparisons. 

XXIV.  Technique  of  Coal  Storing     .      .      .      .     200 

Little  data  available;  War  compelled  storage;  Experience  failed  to 
teach;  Prof.  Stoek's  conclusions;  Power  plant  experience;  Storing 
screenings. 


X  CONTENTS 

CHAPTER  PAGE 

XXV.  Problems  in  Steel  Buying 207 

Chemistry;  Common  elements;  Refractories  fuel;  Fluxes,  basic  and 
acid;  Slag;  Pig-iron;  Pig-iron  sales;  Inexperienced  buyers; 
Analysis  of  pig-iron;  Impurities;  Blast  furnace;  Bessemer  furnace; 
Open  hearth;  Electric  steel;  Ingots  and  their  defects;  Scale-tears; 
Structural  changes;  Carbon;  Steel  hardening;  Alloys;  Bibliography. 

XXVI.  Modern  Foundry  Supplies 222 

Moulding  sand;  Securing  uniform  quality;  Coke;  Fire  brick;  Mal- 
leable furnace  practice. 

XXVII.  Chicago  Elevated:  Stores  Department  .     225 

Organization ;    Duties ;    Records ;    Stock    order ;    Receiving    memo- 
randum ;    Monthly  statements ;    Scrap    materials ;    Travelling  store- 
keeper; Forms. 

XXVIII.  Salvage  Now  a  Science 243 

Importance;  Reclaimed  goods;  Scrap;  Lumber  reclamation;  Con- 
tracts are  desirable;  Use  car  shipments;  Records;  Keep  quality  up; 
Classification  of  scrap;  Non-ferrous  scrap;  Classification;  Trim 
shop  scrap;  Miscellaneous  scrap. 

XXIX.  Progress  in  Cooperative  Buying   .      .      .     261 

Progress  with  association  of  American  colleges;  Plan  for  cooperat- 
tive  buying;  Central  council  of  social  agencies  experiment. 

XXX.  Nostrums  and  Fancy  Names     .      .      ,      .     272 

High  prices  for  wonder  goods;  Beware  of  fancy  names;  The  lubri- 
cation expert;  Disinfectants. 

XXXI.  Practical  Problems  for  Solution     .      .     276 

Cinders ;  Paper  towels ;  Tote  boxes ;  The  better  price  salesman ; 
Carbon  paper  and  gold  pins;  Cigars;  Christmas  gifts;  The  better 
price  buyer;  Waste  paper;  Paint  tests;  Coal  contracts;  Glycerine; 
Duplicate  shipments;  Envelopes;  The  steam  pump;  Scrap  iron; 
Cotton  yarn;  Supply  tests;  Tires;  Motor  cars;  Rubber  stoppers; 
Coal  shipments;  The  files;  Quality  right,  billing  wrong;  Machinery; 
The  paint  salesman;  Soap;  Plumbing  supplies;  Defective  castings. 

Index 293 


Chapter  I 

INTRODUCTION  AND  SOURCES  OF 
INFORMATION 

The  Need  for  Study. — There  are  still  a  few  men  whose 

opinions  upon  other  subjects  are  worth  considering,  who  ap- 
parently believe  that  anyone  who  is  reasonably  intelligent, 
can,  without  preparation,  become  a  successful  purchasing 
agent  over  night.  I  want  to  drive  home  the  fact  that  it  is 
just  as  impossible  for  a  man  without  preparation  so  to  spend 
money  that  he  will  best  serve  his  firm,  as  it  is  successfully  to 
follow  any  other  trade  or  profession  without  preparation.  It 
is  equally  impossible  for  the  purchasing  agent  to  continue  to 
grow  if  he  does  not  continue  to  study. 

Technique  of  Other  Professions. — The  technique  of  any 
profession  or  occupation  might,  I  suppose,  be  so  boiled  down 
that  it  could  be  stated  in  very  few  words.  In  the  last  analysis 
the  whole  technique  of  the  lawyer  is  his  knowledge  of  the 
basic  principles  of  justice,  as  popularly  administered,  coupled 
with  the  ability  to  find  and  suitably  present  data  concerning 
relevant  cases  which  have  been  decided  in  the  past.  The 
whole  technique  of  the  surgeon  might  be  summed  up  as  the 
knowledge  of  the  human  machine,  its  ailments  and  the  most 
modern  remedies  for  those  ailments,  coupled  with  a  more 
or  less  pleasing  bedside  manner.  The  whole  technique  of 
the  chemist  is  capable  of  being  condensed  into  the  knowledge 
of  the  inherent  qualities  of  the  materials  he  works  with, 
under  varying  conditions,  and  the  actions  and  reactions  that 
may,   or  may  not,  take  place  under  certain  conditions. 

Just  so,  the  whole  technique  of  exchanging  dollars  for 
commodities  might  be  summed  up  as  the  ability  to  find  sources 
and  materials  that  will  secure  for  the  purchasing  agent's  firm 
the  greatest  ultimate  value;  coupled  with  clean-cut  integrity, 
and  a  knowledge  of  the  laws  governing  the  action  and  reac- 
tion of  economic  factors  which  regulate  supply  and  demand, 

1 


2     PURCHASING  PRINCIPLES  AND  PRACTICES 

and  so  fix  prices.  If  you  will  add  the  knowledge  of  how  to 
find  authoritative  information  concerning  any  problem  and 
a  genuine  liking  for  people,  you  have  the  specifications  for 
a  successful  purchasing  agent. 

This  Is  Skeleton  Only. — What  has  been  sketched  above 
is,  of  course,  only  the  skeleton  of  the  requirements  in  each 
case.  The  laywer  must  study  his  case  books  and  learn 
methods  of  procedure.  The  physician  must  learn  just  how 
the  human  body  is  constructed,  by  painstakingly  dissecting  it 
In  the  laboratory.  He  must  know  his  chemistry,  pathology, 
and  bacteriology,  and  he  must  serve  as  a  hospital  interne 
before  he  is  capable  of  actually  beginning  his  practice.  He 
must  continue  to  study  as  long  as  he  lives,  if  he  wishes  to 
keep  abreast  of  his  profession.  The  lawyer  must  review 
and  discuss  with  his  fellow  students  hundreds  of  cases  before 
he  can  be  admitted  to  the  bar.  The  engineer  must  spend 
many  months  In  the  laboratory,  and  In  the  field,  before  men 
will  be  willing  to  entrust  to  him  the  construction  of  a  building 
or  a  bridge.  The  chemist  must  perform  many  routine  experi- 
ments before   his   analysis   may  be   considered   authoritative. 

From  Apprentice  to  Student. — Just  so,  the  purchasing 
agent  who  would  make  a  worth  while  place  for  himself  in  ^ 
his  chosen  line  of  work,  must  expect  to  serve  a  long  and  \ 
tedious  apprenticeship.  He  should  expect  to  remain  a  student 
all  the  days  of  his  life,  if  he  would  secure  the  technical  in- 
formation and  experience  that  will  enable  him  to  stand  out 
from  the  crowd. 

Some  Succeed  Without  Continued  Study. — It  is  true  that 
there  are  thousands  of  physicians,  and  many  lawyers,  chem- 
ists and  engineers,  who  manage  to  get  along  fairly  well 
without  doing  much  research  work  after  they  actually  engage 
upon  their  life  work.  Some  of  them  seem  to  get  along  rather 
well. 

The  physician  may,  however,  ruin  his  whole  career  be- 
cause he  is  not  prepared  to  apply  modern  remedies  for  one 
of  his  most  valued  patients;  the  lawyer  may  lose  his  most 
important  case  because  he  is  not  familiar  with  the  latest  de- 
cisions; the  chemist's  analysis  may  be  worthless;  the  engineer 
may  find  he  has  planned  a  building,  but  omitted  important 
modern  developments,  if  he  has  ceased  to  be  a  student.  The 
purchasing  agent  who  is  not  in  touch  with  the  great  economic 


INTRODUCTION  3 

forces  which  control  supply  and  demand  may  find  his  firm 
suddenly  embarrassed  because  he  has  not  built  up  the  busi- 
ness connections  which  will  enable  him  to  secure  needed  ma- 
terials when  tl)e  "pinch"  comes;  or  he  may  find  that  he  has 
tied  up  all  available  current  resources  in  inventories,  just 
when  they  need  the  goods  least,  and  when  they  need  ready 
money  badly. 

No  Advancement  Without  Labour. — The  object  of  this 
work  is  to  describe  briefly  the  purchasing  profession  as  it  is 
carried  on  in  modern  industry,  to  dwell  in  detail  upon  a  few 
of  the  more  important  problems  the  buyer  is  apt  to  confront, 
to  cite  some  typical  business  cases,  to  point  out  some  of  the 
most  valuable  sources  of  technical  information,  and  to  show 
how  they  may  be  profitably  used. 

The  measure  of  success  the  individual  attains  in  any 
line  of  work  bears  a  very  definite  relation  to  the  amount  of 
time  he  spends  in  a  serious  study  of  the  various  complexities 
of  his  special  problems. 

Use  the  Libraries. — Every  man  who  devotes  his  life  to 
the  advantageous  spending  of  other  people's  money  is  con- 
stantly confronted  by  a  series  of  problems  involving  the  prin- 
ciples of  economics  and  a  very  considerable  amount  of  tech- 
nical detail.  In  view  of  this  fact,  it  is  surprising  that  even  the 
most  successful  purchasing  agents  use  the  libraries  so  little. 
Buyers  lose  many  a  night's  sleep  working  out  solutions  for 
problems  that  confront  them  when  they  would  find  the  solu- 
tions ready  made  if  they  were  to  spend  a  few  hours  in  the 
library  searching  the  material  there  available,  instead  of 
working  it  out  for  themselves. 

How  the  Library  May  Serve  the  Purchasing  Agent. — 
The  fact  that  so  many  members  of  the  purchasing  profession 
are  daily  obtaining  creditable  results  without  recourse  to  the 
libraries  speaks  volumes  for  their  ability,  but  does  not  say 
much  for  their  conservation  of  energy.  Few  problems  are 
new.  Most  of  them  are  simply  old  friends  in  new  clothes. 
As  the  great  majority  of  all  the  discoveries  of  the  world  are 
recorded  in  books  and  current  literature,  the  information  you 
need  may  be  found  by  searching  the  files. 

Are  your  lubrication  costs  too  high?  You  will  find  more 
technical  information  concerning  lubrication  in  the  average 
public  1  brary  than  you  can  absorb  in  many  days.     Read: 


4    PURCHASING  PRINCIPLES  AND  PRACTICES 

BIBLIOGRAPHY  OF  LUBRICATION 

1.  Allen,  Irving  C,  "The  Flash  Point  of  Oils — Methods  and  Apparatus 
for  its  Determination."     V.  S.  Bureau  of  Mines  Tech.  Paper.  No.  49. 

2.  Herschel,  Winslow  H.,  "Resistance  of  an  Oil  to  Emulsification."  Bureau 
of  Standards  Technologic  Paper,  No.  86. 

3.  "Memorandum  on  Solid  Lubricants."  Published  for  the  Department  of 
Scientific  and  Industrial  Research  by  His  Majesty's  Stationery  Office — Great 
Britain. 

4.  Stillman,  Thomas  Bliss,   "Examination   of  Lubricating  Oils." 

5.  Waters,  Campbell  Easter,  "Carbonization  of  Lubricating  Oils."  Bureau 
of  Standards,  Circular  No.  99. 

6.  Waters,  Campbell  Easter,  "Data  on  the  Oxidation  of  Automobile  Cylin- 
der Oils."    Bureau  of  Standards  Technologic  Paper  No.  73. 

7.  Waters,  Campbell  Easter,  "The  Evaporation  Test  for  Mineral  Lubri- 
cating and  Transformer  Oils."    Bureau  of  Standards  Technologic  Paper  No.  13. 

8.  Wheeler,  George   Uzziah,  "Friction   and  Its  Reduction." 

Surmises  Instead  of  Facts  Mean  Loss. — Are  you  dis- 
satisfied with  the  quality  or  the  quantity  of  work  turned  out 
by  the  lumber  kiln?  Would  you  like  to  recommend  that 
your  firm  install  a  kiln  of  their  own?  Read  Harry  Donald 
Tiermann's  treatise  on  "The  Kiln  Drying  of  Lumber,"  or 
Joseph  Berhard  Wagner's  "Seasoning  of  Wood,"  and  ask 
the  Director  of  the  Bureau  of  Standards,  at  Washington,  to 
send  you  all  the  technical  papers  he  has  on  the  subject. 

You  win  then  be  in  a  position  to  back  up  your  recom- 
mendations with  authoritative  information.  One  of  the  larg- 
est coal  washcries  in  the  country  was  erected  because  the 
company  thought  they  could  make  it  pay.  It  has  operated 
at  a  loss  from  the  first  day.  The  trouble  was  that  the  man 
who  backed  the  project  depended  on  estimates  and  surmises 
instead  of  authoritative  data.  Nothing  discredits  a  man 
more  quickly  than  his  unqualified  endorsement  of  a  project 
that  later  proves  to  be  a  losing  venture. 

Other  Examples. — Do  reports  from  the  construction  de- 
partment show  that  some  of  the  Portland  cement  work  Is  not 
holding  up?  Ask  the  Director  of  the  Bureau  of  Standards  to 
send  you  a  copy  of  his  Annual  Report  for  1920.  Turn  to  page 
200,  and  note  the  remarkable  changes  detected  in  cement  which 
had  been  stored  only  28  days. 

Are  you  having  trouble  with  mimeograph  paper.  That  is 
not  a  new  problem.  The  Bureau  of  Standards  has  conducted  a 
series  of  tests  on  this  paper.  Ask  the  Director  to  send  you  a 
copy  of  the  report  on  these  tests. 

Are  you  buying  for  a  manufacturing  confectioner?    Do  you 


INTRODUCTION  5 

know  all  the  several  dozen  kinds  of  sugars?  Do  you  know  all 
about  the  "candy  test  for  sugar"  ?  You  will  find  It  on  page  124 
of  the  Director's  report  for  1920. 

Do  you  want  to  compare  your  cost  for  having  samples  of 
materials  tested  with  that  of  others?  The  1919  report  of  the 
purchasing  agent  for  the  State  of  California  contains  some 
very  Interesting  data  on  this  subject. 

Because  the  continued  and  consistent  utilization  of  the  tech- 
nical data  contained  In  the  public  and  other  libraries  is  of  such 
vital  importance  to  the  purchasing  agent  who  would  excel,  I 
shall  explain  briefly  the  method  of  working  in  a  library  at  the 
risk  of  boring  those  familiar  with  such  research. 

Hov^7  to  Find  the  Data  You  Want. — All  the  books  and  most 
of  the  pamphlets  contained  in  the  library  are  listed  in  one  large 
alphabetical  file.  For  every  book  there  are  at  least  two  cards, 
and  there  may  be  several  cards  for  a  book.  One  card  is  in- 
dexed under  the  surname  of  the  author,  and  another  under  the 
subject,  or  the  title  of  the  book.  If  the  book  deals  with  several 
subjects,  there  will  be  a  card  for  each  subject.  Each  card  bears 
a  reference  number  by  which  the  attendants  may  find  the  book 
in  the  stacks.  Somewhere  in  each  card  drawer  is  a  card  of 
instructions,  telling  how  the  data  you  want  may  be  located. 

The  card  used  by  the  University  of  Chicago  Library  reads 
as  follows : 

HOW  TO  USE  THE  CARD  CATALOGUE 

This  is  a  catalogue  of  the  books  in  the  library  alphabetically  arranged  by 
author,  title  and  subjects  like  a  dictionary  or  encyclopedia.  For  exceptions  to 
this  practice  read  the  printed  signs  on  the  top  of  the  catalogue  cases. 

Look  for  the  book  you  want  under  the  author,  subject,  or  title,  if  a  distinc- 
tive one. 

The  letters  and  numbers  in  the  upper  left  hand  corner  of  each  card  is  the 
call  number  by  which  books  may  be  drawn.  In  calling  for  books  by  this  num- 
ber, include  location  symbols,  R  R,  Ed,  etc.  For  key  to  these  abbreviations, 
see  sign  on  top  of  catalogue  cases.  All  subject  headings  including  names  of 
persons  treated  as  subjects  are  written  in  red  ink.  Consult  the  assistants  at 
Information  and  Delivery  desks  for  books  and  articles  not  found  in  the 
Catalogue. 

How  to  Find  Current  Articles. — The  card  catalogue  will 
enable  you  to  find  the  material  you  seek  If  It  has  been  issued  In 
book  form.  If,  however,  you  want  to  read  the  most  recent 
data  available,  you  must  get  It  from  current  publications. 
There  are  bulky  indexes  which  attempt  to  list  all  the  worth 
while  articles  appearing  In  periodical  publications.     In  them 


6     PURCHASING  PRINCIPLES  AND  PRACTICES 

you  will  find  the  material  arranged  In  the  books  much  as  the 
books  are  Indexed  In  the  card  file.  The  best  known  Indexes 
are  "Poole's  Index  to  Periodical  Literature,"  which  ceased 
publication  In  1901,  and  the  "Readers'  Guide  to  Current  Lit- 
erature," which  Is  kept  up  to  date. 

Other  Sources  of  General  Information. — In  addition  to 
material  the  purchasing  agent  may  from  time  to  time  secure 
from  the  reference  library  as  an  aid  to  the  solution  of  some 
special  problem,  he  should  have  access  at  all  times  to  a  large 
number  of  current  publications.  He  should  read  at  least  two 
trade  papers  dealing  with  each  of  the  Items  for  which  he  spends 
the  most  money. 

If  he  buys  many  chemicals  he  ought  to  be  a  regular  subscriber 
to  "Drug  &  Chemical  Markets,"  and  one  other  trade  paper. 
If  he  buys  these  drugs  for  resale,  he  ought  to  be  familiar  with 
the  publications  of  the  National  Association  of  Retail  Drug- 
gists. If  he  buys  coal,  he  will  need  to  read  "Coal  Age,"  or 
"Black  Diamond,"  and  the  weekly  reports  published  by  the 
Bureau  of  Mines.  If  he  spends  a  lot  of  money  for  Iron  and 
steel  products,  he  will  want  to  read  the  "Iron  Age,"  the  "Amer- 
ican Metal  Market,"  and  one  or  two  other  publications.  These 
trade  papers  will  give  him  a  good  cross-sectional  view  of  the 
details  of  conditions  existing  in  their  particular  lines. 

If  he  reads  only  trade  papers  he  Is  a  bit  apt  to  become  nar- 
row, however.  In  order  to  fulfill  to  the  fullest  extent  the 
functions  of  a  purchasing  agent,  he  should  be  familiar  with 
the  commodity  reports  Issued  by  various  statistical  bureaus. 
He  should  read  at  least  one  commercial  paper  like  the  "New 
York  Journal  of  Commerce,"  Wall  Street  Journal,"  or  the 
"Chicago  Journal  of  Commerce."  He  should  keep  In  touch 
with  one  or  two  general  trade  magazines  like  "Factory," 
"System,"  "One  Hundred  Per  Cent,"  and  "The  Purchasing 
Agent." 

Bank  Letters. — In  addition  to  the  publications  noted  above, 
one  of  the  most  valuable  sources  of  authoritative  Information 
upon  the  ebb  and  flow  of  Industrial  conditions  is  found  in 
the  publications  of  large  banking  institutions.  These  bank 
letters  are  free  for  the  asking,  and  vary  from  a  brief  statement 
of  local  conditions  as  seen  by  the  officers  of  the  bank,  to  small 
magazines  containing  elaborate  analyses  of  the  changes  which 
have  taken  place,  and  are  taking  place,  in  different  trades  In 
their   particular  territory.      Among  the  most  valuable   bank 


INTRODUCTION  7 

letters  are  those  published  by  the  F'ederal  Reserve  Banks  of  the 
various  districts. 

If  you  are  to  read  these  bank  statements,  It  Is,  I  believe,  of 
prime  Importance  that  you  get  them  not  only  from  several 
banks,  but  that  you  get  them  from  banks  In  several  localities. 
You  win  find  In  comparing  these  statements,  all  of  which  are 
based  upon  supposedly  careful  analyses  of  conditions  as  seen 
by  the  officers  of  the  bank,  that  they  do  not  all  agree  upon 
some  of  the  fundamental  trends  of  the  times.  If  you  read 
only  one  or  two  you  will  not  be  in  a  position  to  form  an  un- 
biased opinion  for  yourself.  If,  on  the  other  hand,  you  base 
your  opinions  concerning  the  probable  trends  of  the  markets  in 
which  you  are  Interested,  and  concerning  the  whole  flow  of 
commodities  and  their  prices,  upon  the  opinions  of  the  many, 
you  will  be  able  to  direct  the  purchasing  policy  of  your  firm 
much  more  Intelligently. 

Back  Your  Decisions  With  Facts. — If  the  purchasing  agent 
will  absorb  the  information  thus  available,  in  addition  to  that 
provided  by  the  daily  papers,  he  will  be  in  a  position  not  only 
to  make  sound  decisions,  but  will  possess  the  authoritative  and 
detailed  facts  with  which  to  back  up  his  decisions  upon  occa- 
sion. I  am  assuming  here  that  every  purchasing  agent  will 
have  in  his  office  at  least  two  of  the  more  reliable  directories. 
In  addition  to  a  comprehensive  catalogue  file. 

How  to  Read. — Many  will  no  doubt  feel  that  the  amount  of 
reading  outlined  here  is  so  great  that  they  would  have  little 
time  for  the  administration  of  the  office  if  they  were  to  follow 
consistently  the  program  mapped  out.  This  is  true,  in  part, 
at  least.  If  you  were  to  read  every  word  in  all  the  publications 
to  which  I  have  referred,  you  would  have  little  time  for  any- 
thing else.  In  order  to  progress  you  must  keep  abreast  of 
the  times,  and  you  must  also  turn  out  a  large  volume  of  work 
each  day.  You  can  do  this  only  If  you  develop  ability  to 
extract  the  essentials  of  a  book  or  magazine  in  the  shortest 
possible  time.  To  do  this,  you  must  learn  to  skim  the  pages, 
but  so  to  skim  them  that  you  will  miss  nothing  important. 

Types  of  Authors. — In  doing  a  large  amount  of  reading 
you  will  soon  discover  that  there  are  three  classes  of  authors. 
First,  there  is  the  author  who  first  makes  a  statement  and  then 
elaborates  upon  it.  Second,  there  Is  the  author  who  leads  up 
to  a  conclusion  which  he  states  last;  and  third,  there  is  the 
author  who  starts  nowhere,  wanders  all  over,  and  gets  nowhere 


8     PURCHASING  PRINCIPLES  AND  PRACTICES 

in  particular.  In  the  publications  you  read  you  will  probably 
find  very  few  of  the  third  group,  and  in  all  probability  most  of 
the  works  will  belong  to  the  first.  If,  then,  you  will  read  the 
first  few  lines  in  each  paragraph,  or  the  first  few  paragraphs, 
you  will  be  able  to  get  all  the  information  you  want  from  a 
vast  number  of  articles  in  a  surprisingly  short  space  of  time. 
It  is  decidedly  better  to  skim  a  large  number  of  sources  of 
information  than  to  read  in  detail  only  a  few.  The  ability  to 
skim,  and  skim  accurately,  will  develop  as  the  volume  and 
scope  of  your  reading  increase. 


Chapter  II 

FACTORS  IN  PRICE  CHANGES 

Theory  of  Prices. — There  is  much  difference  of  opinion 
among  economists  concerning  the  basic  factors  which  determine 
price  changes  in  the  mass.  Some  believe  that  large  price 
changes  are  determined  by  the  relative  mass  of  money  and  the 
relative  mass  of  commodities.  Some  believe  that  the  prices  of 
commodities  in  the  mass  are  not  at  all  affected  by  the  total 
amount  of  money,  but  are  dictated  by  the  total  supply  of  com- 
modities, and  the  total  demand  for  these  commodities. 

In  this  discussion  we  are  not  concerned  with  these  basic 
economic  theories;  we  are,  however,  vitally  concerned  with 
commodity  prices,   their  cause  and  effect. 

Supply  and  Demand. — There  can  be  no  doubt  that  the  price 
of  any  given  commodity  is  determined  at  any  one  time  by  the 
two  interacting  factors,  supply  and  demand.  Because  this  is 
true,  it  is  of  prime  importance  to  every  purchasing  agent  to 
know  the  approximate  supply  of,  and  demand  for,  the  com- 
modities in  which  he  is  principally  interested. 

You  should  know  not  only  the  approximate  supply  and  de- 
mand today,  but  you  ought  to  know  the  producing  capacity  of 
the  factories  or  mines  turning  out  the  product,  and  the  ap- 
proximate rate  of  consumption  over  a  period  of  years.  If  the 
producing  capacity  is  greater  than  the  present,  or  potential, 
demand,  you  ought  to  know  what  steps,  if  any,  are  being  taken 
to  build  up  demand  and  consumption,  and  what  steps,  if  any, 
are  being  taken  to  turn  the  excess  producing  capacity  into  other 
lines. 

Prices  of  Steel. — For  Instance,  the  war  demands  for  steel 
caused  us  to  increase  the  total  producing  capacity  of  this 
country  to  approximately  sixty  million  tons  per  annum.  This 
Is  much  more  than  the  normal  rate  of  consumption.  If,  then, 
you  are  a  heavy  buyer  of  iron  and  steel  products,  there  Is  no 
reason  to  look  for  anything  but  a  continuing  decline  In  the 
price  of  these  products.  There  is  a  huge  producing  capacity, 
and  a  rather  limited  demand.  Under  these  conditions  it  would 

9 


10     PURCHASING  PRINCIPLES  AND  PRACTICES 

not  be  advisable  to  increase  your  stock  or  to  make  long-term 
commitments.  Knowing  as  you  do  the  present  relation  between 
the  supply  of,  and  the  demand  for,  iron  and  steel  products, 
you  can  accurately  predict  the  trend  of  the  price  for  this  com- 
modity. 

If,  however,  there  should  be  a  great  and  sudden  revival 
in  business,  there  might  be  a  temporary  up-swing  in  the  prices 
of  iron  and  steel  along  with  all  other  commodities.  As  it  is 
hardly  conceivable  that  there  should  be  a  revival  of  such  mag- 
nitude that  the  demand  for  iron  and  steel  products  would  be 
increased  to  nearly  double  our  normal  requirements,  the  in- 
crease in  prices  would,  therefore,  probably  be  only  temporary. 
If,  however,  in  the  next  few  months  a  large  percentage  of  the 
surplus  producing  capacity  were  turned  over  to  other  lines  of 
production,  and  we  should  then  have  even  a  moderate  revival 
in  business,  prices  might  advance  somewhat,  and  might  stay 
at  the  new  level  for  some  time.  The  amount  of  the  price  ad- 
vance, and  the  period  it  lasted,  would  depend  entirely  upon 
the  relation  of  supply  and  demand. 

Buyer  Must  Consider  All  the  Factors. — If  you  will  take 
the  time  to  study  the  actual  and  potential  supply  of,  and  de- 
mand for,  the  commodities  in  which  you  are  principally  inter- 
ested, you  will  be  very  much  better  posted  than  are  the  major- 
ity of  purchasing  agents. 

Your  conclusions  concerning  probable  price  changes  should, 
however,  always  be  checked  and  weighed  by  the  knowledge 
that  these  price  changes  are  like  nothing  else  so  much  as  the 
swing  of  a  pendulum.  When  the  pendulum  is  swung  vio- 
lently in  one  direction  it  continues  to  swing  in  that  direction 
until  the  force  of  gravity,  plus  friction  and  the  inertia  of  the 
pendulum,  are  exactly  offset.  When  the  pendulum  reaches 
that  point  in  its  swing,  it  is  stationary  for  a  minute  fraction 
of  a  second,  and  then  begins  to  swing  in  the  opposite  di- 
rection. The  pendulum  does  not  stop  until  it  has  swung 
almost  as  far  in  the  other  direction. 

Humanity  in  the  Mass. — In  other  words,  any  great  swing 
in  the  mass  behavior  of  human  beings,  whether  it  be  in  eco- 
nomics, religion  or  politics,  always  goes  too  far  in  both  direc- 
tions. A  period  of  rigid  enforcement  of  blue  laws  is  always 
followed  by  a  period  of  revolt  in  which  the  great  mass  of 
humanity  goes  too  far  in  the  opposite  direction.  A  great 
swing  in  favor  of  free  trade  is  always  followed  by  a  mass 


FACTORS  IN  PRICE  CHANGES  11 

sentiment  in  favor  of  protection.  The  violence  of  the  back- 
swing  depends  largely  upon  the  violence  of  the  up-swing,  al- 
though there  are  other  factors  which  tend  to  modify  action 
and  reaction. 

The  Pendulum  Swing. — There  are  two  other  points  I  wish 
to  emphasize  in  this  connection.  First,  there  is  a  period  when 
the  swing  of  this  pendulum  has  been  nearly  checked,  and 
when  there  appears  to  be  almost  no  movement  in  either  direc- 
tion. This  period  of  rest  is  apparently  greater  when  the  swing 
has  been  less  violent. 

As  any  great  swing  in  one  direction  is  apt  to  be  followed 
very  quickly  by  a  violent  swing  in  the  other  direction,  a  period 
of  inflation  is  followed  by  a  period  of  deflation.  A  period  of 
optimism  is  followed  by  a  period  of  pessimism  and  depression, 
and  the  extent  of  both  movements  bears  a  very  definite  rela- 
tion to  the  violence  and  extent  of  the  previous  movement. 

It  is  always  darkest  just  before  dawn,  and  prices  are  always 
lowest  before  a  great  upward  movement,  and  always  highest 
before  a  great  period  of  falling  prices. 

Individual  Items  May  Be  Uneven. — In  reading  these  gen- 
eral principles  and  trying  to  apply  them  to  your  purchasing 
policies,  bear  in  mind  that  they  are  true  of  prices  in  the  mass 
and  in  the  aggregate.  The  price  cycle  of  any  one  commodity, 
however,  may  not  follow  the  general  swing  because  of  some 
other  modifying  factor,  or  factors.  In  any  period  of  price 
adjustment,  whether  it  be  adjustment  upward  or  adjustment 
downward,  there  is  always  a  certain  degree  of  unevenness  in 
the  movements  of  specific  commodities.  If  the  general  change 
in  price  levels  Is  great  and  rapid,  these  uneven  spots  will  be 
even  more  noticeable  than  if  the  movement  is  slow  and  of 
less  extent. 

Buyers  Must  Not  Gamble  on  Commodity  Market. — I  have 
set  forth  briefly  the  economic  background  of  price  changes. 
In  applying  these  rules  to  your  specific  business  you  must 
square  the  facts  with  other  known  facts  which  affect  the  par- 
ticular commodities  in  which  you  are  specially  Interested,  and 
then  map  out  your  purchasing  policy  in  the  light  of  all  the 
facts,  and  In  accordance  with  the  needs  of  your  firm,  and  their 
financial  ability  to  carry  stocks;  and  in  view  of  the  high  or  low 
interest  rates. 

In  the  long  run,  it  Is  never  justifiable  for  the  purchasing 
agent  to  gamble  on  the  commodity  market.     He  should  buy 


12     PURCHASING  PRINCIPLES  AND  PRACTICES 

material  he  knows  he  will  need  just  far  enough  in  advance 
to  secure  delivery  when  he  needs  that  material,  and  no 
farther.  We  all  know  of  men  who  have  made  a  great  deal 
of  money  for  their  firms  by  gambling  on  the  commodity  market 
with  money  which  belonged  to  their  firms,  and  the  stockholders 
thereof.  For  every  man  who  gambled  and  won,  however, 
there  is  at  least  one  man  who  gambled  and  lost.  Your  duty 
is  to  buy  for  consumption,  or  for  resale,  and  not  in  order  to 
pile  up  speculative  profits. 

The  Earned  Dollar  Is  Better. — There  seems  to  be  a  cer- 
tain sturdiness  and  worth  about  the  dollar  honestly  earned 
that  speculative  profits  do  not  possess.  All  too  often  the  easy 
money  is  wasted,  and  many  of  the  honest  dollars  that  have 
been  earned  must  be  thrown  after  these  dollars. 

Business  Cycles. — If  you  are  interested  in  studying  the 
details  back  of  these  business  cycles,  and  would  like  to  make 
the  acquaintance  of  the  men  who  stand  behind  the  stage  and 
shift  the  scenes,  and  would  like  to  examine  all  the  delicate 
machinery  they  work  with,  you  will  find  great  Interest  and 
profit  in  reading  "Business  Cycles,"  by  Leslie  J.  Mitchell,  of 
the  University  of  California,  This  is  one  of  the  most  valu- 
able works  of  its  kind  In  existence. 

If  you  have  not  the  time  to  read  the  whole  book  you  should 
at  least  skim  the  last  or  third  part.  One  of  his  interesting 
deductions  is  that  the  period  that  usually  elapses  between  the 
peak  in  commodity  prices  and  the  point  when  they  have 
reached  bottom,  and  begin  to  move  upward  again,  has  always 
been  from  twenty-four  to  thirty-six  months.  Mr.  Mitchell's 
conclusions  are  checked  and  backed  up  by  a  mass  of  tables  and 
charts  which  are  analyzed  and  summed  up  in  a  most  scholarly 
manner. 

Law  of  Substitution. — In  endeavoring  to  foresee  price 
changes  that  are  likely  to  occur  in  any  one  commodity,  two 
factors  of  great  importance  are  often  overlooked.  The  first 
is  the  law  of  substitution,  and  the  second  is  the  nice  difference 
between  demand  and  consumption,  and  producing  capacity  and 
visible  supply. 

For  every  commodity  there  is  a  peak  price  beyond  which  it 
cannot  be  forced.  Up  to  that  point  the  great  majority  of 
consumers  will  continue  to  pay  the  price,  and  will  continue 
to  buy  nearly  the  same  quantities  they  have  been  accustomed 
to  consume.     As  the  price  of  that  particular  commodity  ap- 


FACTORS  IN  PRICE  CHANGES  13 

proaches  the  peak,  however,  more  and  more  of  the  mass  of 
people  will  cease  to  pay  the  price,  and  will  either  use  a  substi- 
tute, or  will  so  arrange  their  plan  of  living  that  they  will  do 
without  that  particular  item  entirely.  This  applies  to  every 
commodity,  regardless  of  its  apparent  necessity,  and  regardless 
of  the  apparent  continued  ability  of  the  consuming  public  to 
pay  the  price  asked. 

The  Peak  Price  in  Sugar. — In  the  last  great  upward  move- 
ment in  the  price  of  sugar,  the  buying  and  consuming  public 
seemed  to  demonstrate  pretty  clearly  that  they  would  consume 
practically  the  same  amount  of  sugar  at  twenty  cents  per 
pound  that  they  did  at  five  cents  per  pound.  When  the  price 
approached  thirty  cents  per  pound,  however,  the  consumption 
was  noticeably  curtailed,  and  this  In  spite  of  ability  on  the  part 
of  the  great  mass  of  consumers  to  pay  the  thirty-cent  price. 

Aparently  the  great  mass  of  the  American  people  regard 
thirty-cent  sugar  as  too  great  a  luxury.  They  do  not  think 
sugar  can  be  worth  that  much  money,  and  when  the  price 
approaches  that  figure,  they  cease  to  buy.  This  same  law 
applies  to  every  commodity;  sugar  Is  merely  a  striking  illustra- 
tion of  the  law. 

Demand  May  Be  Fictitious. — The  experiences  of  the  period 
of  inflation  which  followed  the  ending  of  the  World  War 
showed  conclusively  that  there  was  a  very  real  difference  be- 
tween demand  and  rate  of  consumption,  and  between  supply 
and  rate  of  production. 

Because  of  the  breakdown  In  the  transportation  system, 
the  railroads  were  not  able  to  move  materials  of  all  kinds  as 
fast  as  they  were  required.  The  average  purchasing  agent 
therefore  ordered  several  times  as  much  material  as  he  actu- 
ally needed  to  make  sure  that  he  would  not  run  short.  The 
result  was  that  the  demand  for  a  carload  of  merchandise  by  the 
ultimate  consumer  might  be  multiplied  to  ten  or  fifteen  cars  by 
the  time  the  order  reached  the  producers  through  the  many 
channels  of  trade,  both  regular  and  irregular. 

This  created  a  fictitious  demand  which  had  very  little  rela- 
tion to  the  rate  of  consumption  of  the  various  commodities, 
and  a  short  supply  which  would  have  been  short  for  only  a  very 
brief  period,  was  magnified  many  times,  until  It  appeared 
that  there  was  a  permanent  shortage  in  many  lines. 

In  the  long  run,  supply  tends  to  equal  demand,  and  in  this 
case  the  actual  supply  finally  caught  up  with   the   artificial 


14     PURCHASING  PRINCIPLES  AND  PRACTICES 

demand,  with  the  result  that  the  whole  market  collapsed,  and 
many  purchasing  agents  of  long  experience  were  caught  with 
stocks  which  had  very  little  relation  to  the  consumptive  de- 
mands of  their  firms.  In  many  cases  this  resulted  in  great 
financial  loss  and  embarrassment. 

Purchasing  Agent  Must  Make  Intelligent  Guess. — In  a 
word,  the  purchasing  agent  who  Is  charged  with  responsibility 
for  the  purchase  policies  of  his  firm  must  be  able  to  distinguish 
actual  demand  from  an  artificial  demand.  We  all  know  what 
has  happened  after  It  has  happened.  The  purchasing  agent 
should  be  able,  within  reasonable  limits,  to  foretell  the  thing 
that  Is  apt  to  happen  before  it  has  happened. 

The  head  of  one  of  the  greatest  banking  Institutions  In  this 
country  is  credited  with  the  statement  that  he  had  succeeded 
in  piling  up  his  immense  fortune  because  he  was  able  to  tell 
what  was  going  to  happen  In  the  commodities  and  securities 
markets  six  months  before  It  did  happen. 

The  average  purchasing  agent  cannot  hope  to  forecast  the 
commodity  markets  six  months  In  advance,  but  he  should  at 
least  be  equipped  to  tell  what  is  going  to  happen  when  a  new 
movement  actually  starts. 


Chapter  III 

A  TYPICAL  PURCHASING  DEPARTMENT 

How  a  Purchasing  Department  Grows. — In  the  first  two 
chapters  we  have  pointed  out  the  necessity  for  continued  study, 
and  have  discussed  at  length  some  of  the  more  important 
sources  of  information,  and  how  they  may  be  used.  In  the 
second  chapter  we  discussed  the  theory  of  price  changes,  how 
these  changes  take  place  and  how  they  affect  the  purchasing 
agent.  Let  us  now  look  at  the  development  of  the  modern 
purchasing  department.  Perhaps  the  best  method  is  to  ex- 
amine the  purchase-function  in  an  infant  industry,  and  then 
trace  the  development  of  the  purchase-function  as  the  business 
grows  from  a  small  shop  into  an  integral  part  of  a  huge  enter- 
prise. 

It  is  quite  possible  that  much  of  the  information  brought  out 
in  the  pages  devoted  to  the  development  of  a  typical  purchas- 
ing department  will  be  familiar  to  experienced  buyers,  but  even 
these  men  of  wide  experience  may  find  the  following  outline 
interesting.  Throughout  this  work  we  shall  strive  not  only 
to  cover  the  more  technical  phases  of  the  purchase-function, 
but  to  discuss  the  more  elementary  details,  so  that  the  inex- 
perienced may  find  them  made  clear,  and  the  men  of  experience 
may  not  find  them  dull  reading. 

The  father  of  the  waggon  maker  was  the  village  black- 
smith, and  the  giant  automobile  industry  is  the  step-child  of 
the  buggy  and  waggon  maker.  It  has,  therefore,  seemed  par- 
ticularly fitting  to  trace  the  development  of  the  purchase-func- 
tion of  the  buggy  maker  as  he  develops. 

The  Business  Is  Founded. — In  the  early  seventies  Amos 
Johnson  set  up  in  the  town  of  Crete  a  small  buggy  plant,  and 
employed  two  helpers.  In  this  plant,  he  occupied  the  position 
of  sole  owner  and  general  manager,  but  he  was  also  sales 
manager,  production  man,  auditor,  cashier,  bookkeeper,  pur- 
chasing agent,  and  storekeeper.  His  purchasing  routine  was 
simple.  Whenever  he  wanted  some  more  spoke  dowels  or 
leather  for  cushions,  he  wrote  a  longhand  letter,  or  selected 

IS 


16     PURCHASING  PRINCIPLES  AND  PRACTICES 

the  material  in  person.  One  evening  each  week  he  spent  in 
making  his  simple  day  book,  ledger  and  cash  book  entries,  and 
in  pasting  the  paid  invoices  in  a  huge  scrapbook.  The  unpaid 
bills  were  stuck  on  a  spindle  back  of  the  stove.  Sometimes  he 
discounted  his  bills,  but  more  often  he  did  not. 

Amos  built  good  buggies,  however,  and  sold  them  at  a 
right  price,  and  it  was  not  long  before  he  found  It  necessary 
to  add  two  more  men  to  his  working  force.  This  meant  that 
in  order  to  keep  up  the  quality  of  his  product,  and  keep 
costs  down,  he  had  to  spend  more  and  more  time  In  super- 
vision, and  less  time  in  actual  labour. 

The  First  Bank  Loan. — The  business  was  growing  nicely 
when  he  began  to  need  more  funds  to  bridge  the  gap  between 
the  purchase  of  the  raw  material  and  the  collection  of  pro- 
ceeds from  the  sale  of  the  finished  product.  One  afternoon  he 
dropped  in  to  talk  the  matter  over  with  the  local  banker.  He 
brought  his  last  trial  balance  and  a  list  of  assets  and  liabilities, 
which  Interested  the  banker.  He  wanted  to  borrow  $2,000. 
There  was  a  lot  of  extra  fine  oak  lumber  for  sale  at  a  bargain 
at  the  county  seat,  and  he  would  like  to  borrow  another 
thousand  dollars  to  buy  it.  After  going  over  all  the  facts, 
the  local  banker  surprised  him  by  offering  to  lend  not  $3,000, 
but  $5,000.  He  specified,  however,  that  the  extra  $2,000  was 
to  be  used  as  a  working  fund.  This  loan  was,  moreover,  to  be 
made  upon  the  one  condition  that  he  discount  his  bills,  and 
that  he  employ  a  man  to  look  after  his  oflice  details,  which 
were  beginning  to  get  away  from  him. 

The  First  Office  Worker. — The  bargain  was  struck  and 
John  Smith,  who  had  just  been  graduated  from  high  school, 
was  employed  to  handle  the  office  end  of  the  work.  One  of 
John's  duties  was  to  write  out  the  longhand  requests  for 
materials,  check  up  the  deliveries,  and  to  see  that  the  bills 
were  paid  in  time  to  earn  cash  discount.  All  went  along 
smoothly  until  a  dispute  arose  with  a  leather  supply  house, 
which  had  shipped  ten  dozen  enameled  horsehides  when  John 
had  intended  to  order  only  one  dozen. 

The  First  Purchase  Order  Book. — The  dispute  was  finally 
settled  by  the  supply  house  allowing  Amos  six  months  in  which 
to  pay  for  the  hides,  but  even  then  this  bill  ate  an  unpleasantly 
large  hole  in  his  cash  reserves.  The  net  result  of  this  episode 
was  the  substitution  of  a  pocket  duplicate  order  book,  using 
a  pencil  and  one  carbon  copy,  in  place  of  a  letter  for  ordering 


TYPICAL    PURCHASING   DEPARTMENT       17 

materials.  These  orders  were  now  made  out  by  John,  signed 
by  Amos,  and  a  carbon  copy  was  always  on  hand  to  aid  in 
checking  bills,  deliveries,  and  payments. 

The  First  Shortage. — After  the  establishment  of  the  new 
duplicate  order  system,  things  ran  smoothly  for  a  time,  but 
occasionally  a  slow  shipment,  or  the  failure  of  the  shop  fore- 
man to  foresee  his  wants,  caused  Smith  to  move  fast  in  order 
to  keep  the  factory  supplied  with  the  necessary  materials.  The 
next  difficulty  arose  when  he  took  a  week  off  to  get  married. 

Now  the  Johnson  buggies  were  noted  for  their  fine  glossy 
finish,  which  was  due  to  the  addition  of  a  small  quantity  of 
China  wood  oil  to  the  varnish  coats.  This  was  purchased 
from  a  broker  in  Chicago,  one  barrel  at  a  time.  The  night 
after  John  left  on  his  honeymoon,  the  foreman  in  the  paint 
shop  forgot  to  close  the  spigot  on  the  barrel  of  China  wood 
oil,  and  the  remaining  twenty  gallons,  which  should  have 
lasted  three  weeks,  were  all  on  the  floor  when  he  reached  the 
shop  next  morning.  Amos  had  taken  a  great  deal  of  pride  in 
the  fact  that  his  buggies  were  always  ready  to  deliver  when  he 
promised  them,  but  he  took  even  a  greater  pride  in  the  un- 
varying high  quality  of  his  product.  Because  of  the  leaky 
spigot  and  the  lost  China  wood  oil,  a  shipment  of  Johnson 
buggies  was  late  for  the  first  time  since  the  business  was 
founded. 

The  Remedy. — The  net  result  of  this  accident  was  a  rule 
that  the  China  wood  oil  must  be  carried  in  one  gallon  cans 
instead  of  in  a  barrel,  and  twenty  cans  were  put  in  a  special 
cupboard  as  a  reserve  supply  to  guard  against  the  recurrence 
of  the  shortage,  and  a  little  receiving  and  storeroom  was 
created,  and  placed  in  charge  of  the  foreman. 

In  this  storeroom,  each  item  was  given  a  numbered  shelf  or 
bin  bearing  the  name  and  part  number,  and  a  specially  labeled 
quantity  of  each  important  item,  enough  to  last  three  weeks, 
was  marked  and  kept  in  reserve  for  emergencies.  This  meant 
that  a  rather  large  amount  of  money  was  tied  up  without  pro- 
ducing any  returns,  but  Amos  considered  this  much  cheaper 
than  a  possible  shutdown,  a  shipment  of  inferior  buggies,  or 
another  broken  delivery  promise. 

The  Typewritten  Order. — As  John  no  longer  counted  in 
the  bars  of  iron  and  checked  the  square  inches  in  every  hide, 
it  was  desirable  to  make  another  copy  of  the  purchase  order 
for  the   foreman,  who  had  charge  of  receiving  and  stores. 


18     PURCHASING  PRINCIPLES  AND  PRACTICES 

About  this  time  the  Smith  Premier  Co.  was  marketing  the 
old  double  keyboard  typewriter,  and  John  persuaded  Amos 
to  purchase  one.  As  he  had  sometimes  experienced  difficulty 
in  matching  invoices  with  order  copies,  he  arranged  to  have 
the  purchase  order  copies  printed  and  numbered  in  triplicate. 
One  copy  was  to  go  to  the  vendor,  one  to  the  storekeeper,  and 
one  was  for  the  office  file. 

The  Purchase  Schedule. — ^At  this  stage  of  development 
Smith  was  still  a  general  office  man,  who,  in  addition  to  his 
other  duties,  handled  the  purchase-routine,  and  wrote  the 
letters;  but  Amos  still  signed  all  letters  and  orders.  The 
office  copies  of  all  purchase  orders  were  left  bound  in  the 
book. 

As  the  farmers  of  Ohio  and  Michigan  were  very  prosper- 
ous, there  was  a  great  demand  for  the  now  famous  Johnson 
side-bar  buggy.  Amos  was  still  far  from  wealthy,  and  the 
demand  for  funds  for  the  various  needs  of  the  plant  kept  him 
awake  many  nights.  It  was  necessary  to  keep  the  Investment 
in  inventories  at  the  lowest  possible  point  commensurate  with 
safety,  but  it  was  of  more  imortance  than  ever  that  the 
plant  should  not  be  tied  up  for  the  want  of  some  one  item. 

Averaging  Materials  and  Output. — In  order  to  solve  this 
problem  Amos  and  John  spent  many  long  evenings  together, 
and  this  was  the  solution  reached:  they  estimated  that  under 
existing  conditions  they  could  make  and  sell  an  average  of  ten 
buggies  per  day  for  the  next  fifty  weeks,  or  a  total  of  three 
thousand  buggies.  They,  therefore,  drew  up  a  schedule  of  all 
the  items  needed  to  make  those  three  thousand  buggies,  and 
gave  each  part  a  part  number.  The  next  step  was  to  make  a 
stock  record  card  for  each  item,  showing  at  the  top  the  name 
and  number  of  the  part,  the  number  of  the  bin  in  the  stock 
room,  the  number  of  pieces  on  hand,  the  estimated  requirement 
for  the  next  fifty  weeks,  the  amount  ordered,  order  number, 
firm,  price,  amount  received,  and  amount  issued. 

It  would  require  a  good  deal  of  careful  attention  to  keep 
this  record  up-to-date,  but  they  believed  It  would  be  well  worth 
while,  because  it  would  accomplish  three  things :  ( 1 )  assure 
continuous  flow  of  needed  materials;  (2)  keep  the  stock  all 
live;  and  (3)  keep  the  Inventory  Investment  at  the  lowest 
possible  point  of  safety. 

The   Perpetual  Inventory. — Amos,   John,   and  the   stock 


TYPICAL    PURCHASING    DEPARTMENT      19 

room  clerk  had  many  discussions  as  to  where  this  record  should 
be  kept  and  how  it  should  be  kept.  The  storekeeper  wanted 
to  keep  the  card  record  of  each  item  on  the  bin,  where  he 
could  always  see  that  the  record  of  goods  on  hand  corre- 
sponded with  the  goods  actually  in  the  bin. 

This  is  an  excellent  way  to  keep  the  records  in  accord  with 
the  goods  on  hand,  but  it  has  several  rather  serious  draw- 
backs. If  the  cards  are  kept  on  the  bin  they  must  of  course  be 
dusty  and  dirty,  as  the  records  must  be  made  by  the  store- 
keeper, whose  hands  are  often  dirty.  The  cards  would  al- 
ways be  hard  to  read,  and  would  always  be  inconvenient  for 
the  office  force  to  reach. 

The  storekeeper  next  wanted  the  cards  kept  in  a  card  file  on 
his  desk.  This  would  keep  them  cleaner,  but  they  would  still 
be  inaccessible  to  the  office. 

After  viewing  the  problem  from  all  angles,  they  finally  de- 
cided to  keep  the  card  file  in  the  office,  and  have  it  compared 
with  the  stock  on  hand  every  six  months. 

The  Modified  Record  System. — This  perpetual  inventory 
and  purchase  order  record  worked  well  for  the  first  few 
weeks,  but  It  soon  became  evident  that  the  record  clerk  was 
lost  in  the  maze  of  cards.  She  never  could  tell  whether  a 
quarter  by  quarter  by  half  tee  was  the  same  as  a  half  by 
quarter  by  quarter,  or  whether  F.  H.  B.  meant  flat  head  bright 
or  flat  head  blued  screws.  It  soon  became  evident  that  this 
card  index  must  either  be  turned  over  to  an  expert,  or  that 
it  must  be  simplified. 

The  next  step,  therefore,  was  to  eliminate  all  cards  for 
unimportant  items,  and  to  keep  a  detail  record  on  major  items 
only.  There  was  no  point  to  spending  three  dollars'  worth  of 
time  keeping  a  record  of  one  size  of  screws,  when  their  total 
purchases  of  that  item  did  not  exceed  fifty  dollars  for  the 
year,  and  they  could  always  pick  them  up  at  the  local  hard- 
ware store,  in  case  of  necessity.  This  change  brought  the 
stock  record  file  down  to  a  usable  size,  and  kept  It  up  to  a 
high  point  of  efficiency  at  minimum  cost.  For  Instance,  Smith 
always  knew  just  how  he  stood  on  spoke  dowels,  but  he  neither 
knew  nor  cared  whether  he  had  on  hand  ten  or  fifteen  gross 
of  a  certain  sized  screw  which  cost  40c  per  gross,  and  could 
be  secured  locally  on  one  hour's  notice. 

The  Order  Index. — Things  had  been  moving  along  rather 
well  now  for  a  long  time;  In  fact  they  had  gone  so  smoothly 


20     PURCHASING  PRINCIPLES  AND  PRACTICES 

that  John  began  to  have  an  uncomfortable  feeling  that  per- 
haps trouble  was  piling  up  somewhere.  About  this  time  the 
local  banker  telephoned  Amos  to  come  down  and  take  up  a 
sight  draft,  drawn  by  a  hardwood  dealer  in  Chicago.  John 
had  mislaid  the  invoice,  had  lost  the  discount,  and  had  inad- 
vertently injured  the  credit  of  the  Johnson  Buggy  Company, 
all  because  of  an  oversight. 

The  draft  was  taken  up  promptly,  and  a  conference  was 
held  to  determine  a  method  to  prevent  a  recurrence  of  this 
oversight.  The  scheme  developed  was  as  follows :  Each  firm 
from  which  they  purchased  materials  was  given  a  separate 
card  in  the  new  purchase  order  index.  This  card  showed  the 
name,  address  and  telephone  number  of  the  vendor,  the  name 
of  the  salesman  who  handled  Johnson's  account,  the  product 
handled,  discount  terms,  and  the  number  of  every  purchase 
order  issued  on  that  firm.  As  each  order  number  was  closed, 
it  was  checked  on  the  card.  (See  Order  Index  card,  page 
108.)  The  office  copies  of  the  purchase  order  numbers  were 
removed  from  the  pad  and  separated  into  two  files — the  open 
or  incomplete  file,  and  the  filled  order  file. 

The  Accounts  Payable  Record. — John  now  had  a  skeleton 
of  a  rather  complete  purchase  record  system;  namely,  a  com- 
modity index  on  the  most  important  items,  an  order  index,  and 
a  filled  and  unfilled  order  file. 

The  business  had  now  expanded  to  a  point  where  they  had 
found  it  necessary  to  add  an  auditor  to  the  staff.  He  was  a 
very  capable  man,  but  inclined  to  be  irascible.  There  had 
been  frequent  arguments  between  John  and  the  auditor  con- 
cerning the  location  of  Invoices.  Sometimes  John  had  them, 
and  sometimes  the  auditor  had  them,  but  neither  had  a  record 
of  the  bills  passed  to  the  auditor  for  payment. 

In  order  to  obviate  this  recurring  difficulty  and  to  fix  re- 
sponsibility, John  made  up  a  list  of  the  bills  sent  In  for  pay- 
ment, and  asked  the  auditor  to  sign  a  receipt  for  them.  This 
worked  very  well  for  a  time,  but  they  were  soon  handling  so 
many  bills  that  the  auditor  could  not  always  take  time  to  check 
over  the  bills  before  he  receipted  for  them,  and  the  receipt 
became  a  matter  of  form. 

About  this  time,  the  auditor  Introduced  the  voucher  method 
of  payment  and  asked  John  to  list  the  accounts  payable  di- 
rectly on  the  accounts  payable  sheets,  and  to  keep  a  carbon 
copy  for  his  files.     This  saved  the  labour  of  relisting  all  the 


TYPICAL  PURCHASING  DEPARTMENT       21 

Invoices  and  gave  John  an  accurate  record  of  all  bills  passed 
for  payment.    (See  Accounts  Payable  form,  page  109.) 

The  Salesman's  Gifts. — About  this  time,  John  was  ap- 
pointed purchasing  agent,  and  was  given  full  purchase- 
authority.  As  soon  as  the  salesmen  learned  that  It  was  John 
who  would  place  the  future  orders  for  the  Johnson  Buggy 
Co.,  he  became  very  popular.  This  was  several  years  before 
the  war,  when  a  salesman  really  needed  to  seek  business,  and 
when  all  buying  and  selling  was  not  as  clean  and  aboveboard 
as  it  Is  today.  John  was  frequently  invited  to  luncheon,  and 
sometimes  to  a  theater  and  supper  party,  and  his  desk  was 
littered  with  cigars  and  cluttered  with  note-books,  paper 
weights,   rulers,   and  advertising  Inkstands. 

Frequently  the  salesman  for  one  of  the  leather  houses 
would  send  him  a  hand-tooled  leather  trinket,  and  one  day 
he  even  inquired  what  size  shoes  and  gloves  he  wore,  what  size 
shoes  his  wife  wore,   and  what  colour  she  preferred. 

Gifts  or  Graft. — Just  where  to  draw  the  line  between  the 
gifts  he  could  rightfully  accept  and  those  that  he  could  not 
accept,  was  a  thing  which  John  found  very  difficult  to  deter- 
mine. The  next  time  the  salesman  talked  shoes  and  gloves, 
however,  he  asked  him  whether  his  firm  actually  made  shoes 
and  gloves,  and  the  salesman  admitted  that  they  made  gloves, 
but  not  shoes. 

John  then  said  that  he  did  need  a  pair  of  gloves,  and  would 
be  very  glad  to  have  his  salesman  friend  supply  them,  pro- 
vided he  could  purchase  them  at  the  regular  wholesale  price. 
He  assumed  that  the  salesman  had  merely  Intended  to  save 
him  the  retailer's  profit  on  these  items,  and  he  would  be  very 
glad  to  accept  this  small  favour  In  the  spirit  In  which  it  was 
offered. 

The  salesman  readily  agreed  to  this,  but  a  few  days  later 
sent  to  John's  office  a  handsome  pair  of  gloves  and  a  receipted 
bill  for  $2.  At  the  same  time,  he  sent  to  his  house  three  pairs 
of  gloves  for  Mrs.  Smith,  with  his  personal  card,  saying  that 
this  small  gift  was  sent  her  because  of  his  great  regard  for 
John. 

What  would  you  have  done  under  these  circumstances? 
Would  It  make  any  difference  if  you  were  about  to  make 
heavy  purchases   of  leather?     What  difference? 

A  Subtle  Influence. — Mrs.  Smith  was  delighted,  both  with 
the  gift  and  with  the  compliment  to  John,  but  he  was  In  a 


22     PURCHASING  PRINCIPLES  AND  PRACTICES 

quandary.  His  solution  of  the  difficulty  was  found  in  an  invi- 
tation to  the  salesman  to  lunch  with  him  at  his  club  next  day. 
After  the  luncheon  was  well  under  way  John  asked  the  sales- 
man whether  he  had  ever  been  on  the  purchasing  agent's  side 
of  the  desk,  and  then  began  to  outline  the  position  of  the 
purchasing  agent  as  he,  Smith,  saw  it. 

He  wound  up  the  discussion  by  remarking  that  the  salesman 
no  doubt  had  never  viewed  the  matter  in  this  light  before,  but 
that  it  was  no  kindness  to  the  purchasing  agent  to  thrust  these 
gifts  upon  him.  On  the  contrary  it  merely  put  him  in  the  posi- 
tion where  he  had  to  choose  between  hurting  a  friend's  feelings 
and  running  the  risk  of  having  his  own  motives  questioned  at 
some  time  in  the  future.  As  between  the  two,  he  frankly  pre- 
ferred to  wound  a  friend  or  even  risk  losing  one. 

The  FoUow-Up. — The  business  of  the  Johnson  buggy 
plant  had  now  grown  until  John  had  to  devote  practically  all 
of  his  energies  to  the  purchase  of  supplies  and  material.  He 
was  now  issuing  about  one  thousand  purchase  orders  per 
month.  In  such  a  volume  of  orders,  a  certain  percentage  of 
them  were  necessarily  slow,  and  John  began  to  consider  seri- 
ously the  desirability  of  adding  a  tracing  system,  and  a  tracing 
clerk,  to  his  department.  His  filled  and  unfilled  orders  were 
arranged  numerically  in  two  separate  files,  and  the  only  trac- 
ing done  was  a  periodic  thumbing  through  the  oldest  orders 
in   the   unfilled   file. 

He  considered  the  addition  of  a  fourth  copy  to  his  purchase 
order  blanks  for  tracing  purposes,  and  the  institution  of  an 
order  acknowledgment  and  daily  follow-up  system.  This 
would  mean,  however,  rather  more  expense  than  he  cared  to 
add  at  this  time;  so  he  compromised  by  adding  the  fourth 
copy,  but  separating  this  into  two  files,  one  urgent  and  the 
other  routine. 

He  soon  found  that  most  of  the  routine  items  and  a  large 
percentage  of  the  urgent  items  were  cleared  automatically, 
without  tracing.  The  next  step  was  to  send  the  fourth  copy  to 
the  inspection  department,  and  merely  to  record  in  his  daily 
tickler  file  the  numbers  of  the  orders  which  required  a  special 
follow-up. 

The  New  Plant. — About  this  time  the  buggy  business  began 
to  feel  the  competition  of  the  automobile,  and  after  many  con- 
sultations, Amos  Johnson  incorporated  the  Johnson  Automo- 
bile and  Buggy  Co.  and,  with  the  aid  of  a  local  capitahst, 


TYPICAL    PURCHASING    DEPARTMENT      23 

began  the  erection  of  a  modern  factory  building  to  be  given 
over  entirely  to  the  new  industry. 

The  purchase  of  the  machinery  for  this  new  plant  was  by 
far  the  largest  purchasing  problem  John  had  ever  faced,  and 
before  he  began  to  place  orders  he  spent  two  weeks  with  the 
buyer  for  the  largest  automobile  plant  then  in  existence.  As  a 
result  of  this  visit,  he  had  a  definite  plan  of  action. 

As  soon  as  the  factory  superintendent  had  made  ready  his 
layout  and  lists  of  machines,  John  had  them  arranged  on 
sheets,  a  separate  sheet  to  each  section  in  the  plant.  These 
sheets  showed  the  type,  number,  and  name  of  every  machine  in 
each  section,  the  estimated  cost,  date  needed,  and  point  of 
shipment.  As  soon  as  each  machine  was  ordered,  he  set  down 
in  parallel  columns  the  actual  cost,  the  terms,  date  of  ship- 
ment promised,  and  date  to  begin  tracing.  In  addition  to 
these  sheets,  he  placed  the  tracing  date  in  his  daily  tickler 
file. 

With  these  lists  and  the  help  of  an  old  railroad  man  to 
follow  through  the  shipments,  he  had  no  difl^culty  and  the  plant 
opened  up  on  schedule  time. 

The  Daily  Statement. — The  purchase  of  all  this  equip- 
ment meant  rather  a  heavy  drain  upon  the  treasury,  and  in 
order  to  keep  purchases  constantly  related  to  funds  available, 
John  suggested  that  he  submit  to  the  treasurer  a  daily  report 
showing  the  approximate  value  of  purchases,  the  amount  of 
the  invoices  certified  for  payment,  and  the  amount  of  product 
billed  to  vendors.     This  report  proved  to  be  of  great  service. 

Cash  Discount  Data. — At  the  end  of  the  first  year's  opera- 
tion, John  was  compiling  a  report  showing  the  number  of  pur- 
chase orders  issued,  the  monthly  stock  balance,  and  the  amount 
of  cash  discounts  taken,  when  his  attention  was  called  to  a 
cash  discount  Item  of  47c  which  had  been  lost  because  the  bill 
was  delayed  on  the  invoice  clerk's  desk.  He  had  always 
prided  himself  upon  taking  all  cash  discounts,  but  now  he 
began  to  wonder  whether  he  was  not  overlooking  some. 

Upon  analyzing  the  bills  for  the  past  six  months,  he  discov- 
ered that  an  Indolent  clerk  was  losing  more  cash  discounts  for 
the  firm  than  her  salary  amounted  to.  Thereafter  he  called 
for  a  monthly  statement  of  discounts  lost,  and  this  Item  of 
waste  was  cut  from  many  dollars  to  a  few  cents  per  month, 
and  the  credit  rating  of  the  corporation  was  further  Improved. 

The  Pending  File. — Up  to  the  authorization  of  the  pur- 


24     PURCHASING  PRINCIPLES  AND  PRACTICES 

chase  of  machines  for  the  new  plant  there  had  been  no  ap- 
parent necessity  for  a  careful  record  of  quotations,  but  with 
this  rather  large  job  It  seemed  essential  to  devise  some  means 
of  recording  this  data. 

Accordingly,  every  job  on  which  inquiries  were  mailed  was 
given  a  job  number,  and  all  the  papers  relating  to  this  job 
were  filed  under  that  number.  When  the  order  was  placed  the 
order  number  was  recorded  on  the  job  file,  and  the  job  number 
Indexed  on  the  purchase  order.  For  convenience,  data  sheets 
and  Inquiries  were  all  size  85^  x  11.  When  there  were  a  great 
many  papers  and  samples  relating  to  a  job,  the  whole  file 
was  placed  In  a  heavy  manlla  envelope  bearing  the  job  num- 
ber on  the  outside.  This  plan  worked  admirably  while  there 
was  a  large  number  of  jobs  that  were  kept  pending  for  a  long 
time  before  the  orders  were  placed. 

As  soon  as  the  equipment  purchases  were  completed,  how- 
ever, the  job  number  was  discontinued,  and  the  papers  re- 
lating to  a  given  purchase  were  filed  under  the  number  of  the 
purchase  order.  No  number  was  assigned  until  the  purchase 
was  completed.  The  papers  relating  to  all  pending  jobs 
were  filed  alphabetically  under  the  name  of  the  Item  In  a 
pending  file.  For  convenience  these  subsidiary  papers  were 
called  contracts. 

Reputation  at  Stake. — Incidentally,  this  plan  of  filing  all 
quotations  under  the  number  of  the  purchase  order  saved  John 
considerable  embarrassment  on  at  least  one  occasion.  He  had 
sent  out  five  requests  for  quotations  on  three  car  loads  of 
crating  lumber,  and  one  of  the  requests  went  to  a  dealer  who 
happened  to  be  a  close  personal  friend  of  Amos  Johnson. 
The  lumber  dealers  had  a  price  agreement,  and  all  quoted  the 
same  price.  With  one  dealer,  however,  John  had  a  private 
agreement  that  all  purchases  of  a  car  load  or  over  would  take 
a  cash  discount  of  five  percent,  instead  of  the  usual  two  per- 
cent. 

Amos  Johnson's  friend  followed  up  his  bid  in  person  and 
became  quite  excited  because  he  did  not  get  the  business.  He 
even  went  to  Amos  and  charged  that  Smith  was  feathering 
his  own  nest  by  placing  these  lumber  orders  elsewhere,  be- 
cause he  knew  none  of  the  dealers  would  openly  cut  the  price. 
Amos  called  for  the  papers  relating  to  the  purchase. 

The  filing  system  was  so  simple  and  so  complete  that  John 
was  able  to  produce  the  whole  file  without  delay.     If,  how- 


TYPICAL    PURCHASING   DEPARTMENT      25 

ever,  he  had  not  been  able  to  supply  the  data  requested 
promptly,  it  might  have  embarrassed  both  him  and  his  em- 
ployer. 

The  Reasons  for  a  Purchase. — There  are,  however,  some- 
times good  reasons  for  making  a  given  purchase  from  a  certain 
source,  which  do  not  appear  on  the  face  of  the  transaction. 
For  instance,  let  us  assume  that  you  are  in  the  market  for  a 
quantity  of  grand  pianos.  There  are  two  makes  of  grand 
pianos  that  cost  about  the  same.  The  greatest  living  artists 
are  about  equally  divided  as  to  their  preference  for  one  or  the 
other.  The  piano  which  is,  perhaps,  first  choice,  will  cost 
fifteen  dollars  less  than  the  other.  It  would  seem  natural, 
therefore,  to  purchase  the  cheaper  piano.  It  may  happen, 
however,  that  you  rent  a  great  many  pianos  at  a  very  low 
rate  from  the  firm  that  sells  the  higher  priced  piano.  Will  it 
not  be  better  to  purchase  this  instrument,  even  if  you  prefer 
the  other  at  less  cost?  You  will,  no  doubt,  call  the  attention 
of  the  piano  sales  manager  to  the  fact  that  you  arc  actually 
paying  more  money  for  a  piano  which  does  not  appeal  quite 
as  much  to  you  personally,  simply  as  a  mark  of  appreciation  of 
the  way  he  has  handled  your  piano  rentals.  In  the  course 
of  a  year  this  may  save  you  many  dollars. 

This  is  an  excellent  illustration  of  the  fact  that  in  many 
purchases  there  are  important  factors  which  do  not  appear 
upon  the  surface,  of  which  the  outsider  cannot  be  informed, 
and  concerning  which  he  should  not  be  permitted  to  inquire. 
Any  man  or  firm  who  attempts  to  check  up  too  closely  the 
actions  of  his  purchasing  agent  will,  by  that  very  act,  deprive 
him  of  much  of  his  usefulness. 

The  Merger. — About  this  time,  the  Johnson  Automobile 
and  Buggy  Co.  and  six  other  factories  were  merged  into  the 
Associated  Automobile  Factories  Co.  and  John  Smith  was 
appointed  general  purchasing  agent  for  the  new  corporation. 
His  first  act  after  appointment  was  to  make  a  three-day  visit 
to  each  of  the  other  factories.  The  object  of  this  visit  was 
to  acquaint  himself  with  the  layout  and  the  personnel  of  the 
other  purchasing  departments.  While  going  over  details  with 
the  head  of  each  purchasing  department,  he  tried  to  learn  just 
what  weaknesses  and  what  points  of  strength  each  possessed. 

The  Systems  Enthusiast. — The  buyer  in  Factory  A  was  a 
young  man  who  was  a  systems  enthusiast,  and  had  so  much 
office  machinery  that  his  department  was  unduly  cumbersome 


26     PURCHASING  PRINCIPLES  AND  PRACTICES 

and  unduly  expensive  to  maintain.  He  had  apparently  taken 
over  bodily  certain  bits  of  office  system,  and  tried  to  put  them 
to  work  for  him.  In  other  words,  instead  of  determining  what 
office  records  were  essential,  and  then  finding  the  system  that 
would  do  that  bit  of  work  most  efficiently,  he  had  confused 
the  means  with  the  end.  The  office  served  the  system  instead 
of  having  the  system  serve  the  office.  System  and  office  ma- 
chinery may  be  very  excellent  servants,  but  they  are  often 
hard  taskmasters.  It  may  not  be  amiss  to  remark  in  passing 
that  most  young  purchasing  agents  who  are  given  a  free 
rein  will  introduce  too  much  routine,  and  that  many  more  ex- 
perienced buyers  will  tend  to  err  in  the  other  direction. 

The  Remedy. — In  order  to  remove  this  difficulty  without 
injuring  the  feelings  of  the  buyer.  Smith  asked  him  to  explain 
minutely  what  each  bit  of  routine  was  for,  and  whether  it 
actually  justified  its  cost.  After  going  over  the  whole  matter, 
he  merely  remarked  on  leaving  that  it  seemed  to  him,  after 
this  rather  superficial  discussion,  that  there  were  perhaps  some 
bits  of  routine  which  were  not  paying  their  way.  and  suggested 
that  he  check  up  from  that  viewpoint,  and  talk  with  him  about 
it  again  soon.  In  any  case,  no  changes  would  be  made  at  the 
present  time  which  the  local  buyer  did  not  approve. 

The  next  time  John  called  on  this  man,  his  office  routine  was 
much  lighter,  much  more  efficient,  and  much  less  expensive. 

Every  bit  of  routine  must  justify  Itself.  If  a  given  record 
costs  one  thousand  hours'  time  each  year,  and  this  record  is 
used  once  each  month,  and  if  the  facts  could  be  got  at  when 
needed  with  a  total  expenditure  of  five  hours  each  time  they 
are  called  for,  that  record  should  be  eliminated,  unless  there 
Is  some  special  reason  why  the  data  must  be  available  at  once. 

The  "Grouchy"  Buyer. — Smith  next  called  on  the  buyer 
for  Factory  B.  This  man  was  a  buyer  of  the  old  school,  who 
barked  at  everyone,  tried  to  scare  the  office  boy  to  death,  and 
carried  a  large  chew  of  fine  cut  In  his  left  cheek.  With  this 
man  John  went  over  matters  superficially  the  first  day.  In 
spite  of  the  fact  that  he  disliked  the  man's  manner,  and  was 
confident  that  It  was  Indirectly  costing  the  firm  a  good  deal 
In  the  lessened  efficiency  of  the  office  force,  and  the  lack  of 
regard  on  the  part  of  the  salesmen,  he  offered  no  suggestions 
until  he  was  about  to  leave  for  the  day. 

Just  as  he  was  putting  on  his  coat,  he  casually  inquired 
whether  Buyer  B  had  ever  tried  to  put  himself  in  the  shoes 


TYPICAL    PURCHASING   DEPARTMENT      27 

of  the  salesmen  whom  he  accorded  such  scant  consideration, 
and  whether  he  was  conducting  the  sort  of  office  he  would 
like  to  have  his  small  boy  work  in,  if  anything  should  make 
it  necessary  for  him  to  go  to  work.  Then,  before  he  could 
answer,  John  added  that  he  was  going  to  run  home  for  a 
day  or  two,  but  would  drop  in  on  "B"  again  some  day  next 
week. 

When  he  did  return  the  next  week  he  was  amazed  at  the 
Improvement  in  the  general  atmosphere  of  the  office. 

The  "Fussy"  Buyer. — The  buyer  for  Factory  C  was  a 
nervous,  fussy  little  man,  who  seemed  to  be  weighed  down 
with  a  sense  of  his  own  importance,  and  the  importance  of  his 
job.  He  was  always  rushed  to  death,  and  never  seemed  to 
get  anything  done.  He  never  seemed  to  be  happy  unless  he 
was  nearly  buried  in  a  flood  of  papers  above  which  he  could 
merely  raise  his  head  and  snarl.  With  this  man  John  made 
an  appointment  for  seven-thirty  the  next  morning. 

The  first  thing  he  did  was  to  move  out  the  buyer's  big 
old  roll-top  desk,  replace  it  with  a  60-inch  flat-top  desk, 
and  trade  his  uncomfortable  old  hard-bottom  chair,  that 
always  had  one  leg  off  the  floor,  for  a  new  swivel  chair  that 
sat  level  and  had  a  perforated  leather  seat.  Next,  one  by 
one,  he  dumped  the  contents  of  each  drawer  on  the  top  of 
the  desk.  He  saw  to  it  that  nothing  went  into  the  drawers 
of  the  new  desk  that  was  not  essential.  About  one-fourth  of 
the  material  in  the  old  desk  went  into  the  files,  about  one- 
half  went  Into  the  waste-basket,  and  the  remaining  one-fourth 
was  left  on  top  of  the  desk. 

This  data  he  divided  between  material  awaiting  action  by 
some  one  else,  which  was  put  into  a  letter  tray  in  the  second 
drawer  on  the  left  hand  side  of  the  desk;  and  material  for 
attention  today,  which  was  consigned  to  the  letter  tray  in 
the  top  drawer  on  the  left  hand  side.  Only  papers  being 
used  were  to  be  kept  on  top  of  the  desk,  and  each  paper  was 
to  be  disposed  of  in  regular  order.  The  contents  of  the  basket 
in  the  top  drawer  were  to  be  gone  over  the  first  thing  each 
morning  to  avoid  overlooking  any  important  matters.  After 
so  organizing  the  work  for  Buyer  C,  he  left  him  for  the 
day. 

The  next  morning  he  had  a  frank  talk  with  him,  pointing 
out  the  handicap  under  which   "C"   had  permitted   himself 


28     PURCHASING  PRINCIPLES  AND  PRACTICES 

to  work  heretofore,  and  expressing  faith  in  his  ability  to  get 
on  top  of  his  job  instead  of  permitting  it  to  ride  him. 

The  Good  Fellow. — The  buyer  for  Factory  D  was  of  the 
type  commonly  known  as  a  good  fellow.  Everyone  liked 
and  spoke  well  of  him.  The  principal  difficulties  he  experi- 
enced, however,  were  getting  his  work  done,  and  in  keeping 
the  cost  of  his  purchases  down.  Much  of  his  time  was  taken 
up  in  conversing  with  callers  about  matters  which  did  not 
pertain  to  business.  Everyone  who  called  told  him  his  trou- 
bles, the  latest  bit  of  gossip,  and  the  latest  skits.  It  is  true 
that  he  acquired  a  miscellaneous  collection  of  data  of  more 
or  less  value,  but  it  was  at  the  cost  of  far  too  much  time. 

His  Development. — Just  how  to  help  Buyer  D  to  con- 
serve his  time  without  hurting  him,  and  without  causing  him 
suddenly  to  become  too  abrupt  with  his  callers,  was  a  prob- 
lem to  which  John  gave  a  great  deal  of  thought.  After 
watching  this  man,  and  after  working  with  him  for  several 
days,  he  came  to  the  conclusion  that  this  buyer  really  pos- 
sessed an  unusual  faculty  for  getting  his  work  out  with  the 
expenditure  of  a  minimum  amount  of  time  and  effort,  and 
that  he  had  fallen  into  the  habit  of  wasting  time  with  casual 
callers  because  he  felt  that"  he  had  the  time  to  spare.  This 
habit  had,  however,  become  so  fixed  that  it  threatened  to 
impair  his  usefulness. 

John  Smith  decided  to  try  the  experiment  of  loading  him 
up  with  work.  Next  morning  when  he  came  down  he  brought 
two  copies  of  the  specifications  for  equipment  of  a  proposed 
plant  for  the  construction  of  automobile  trucks.  He  laid  one 
copy  of  these  specifications  on  the  desk  of  the  buyer  for 
Factory  D,  and  asked  him  to  analyze  the  data  and  let  him 
have  his  criticisms,  suggestions,  and  cost  estimates  as  soon 
as  he  conveniently  could,  without  interfering  with  his  regular 
work.  The  list  was  so  long  and  so  technical  that  the  average 
buyer  would  have  taken  ten  days  to  two  weeks  to  study  it 
before  making  any  report. 

Getting  Down  to  Business. — There  was  at  once  a  marked 
improvement  in  the  way  Buyer  D  handled  his  work.  Every 
salesman  who  approached  was  given  the  same  hearty  hand- 
shake and  the  same  jovial  smile,  but  he  was  given  no  oppor- 
tunity to  discuss  anything  but  business.  The  routine  work 
was  kept  up  to  date,  and  everything  moved  along  smoothly, 
but  somehow  or  other  Buyer  D  managed  to  devote  a  very 


TYPICAL    PURCHASING   DEPARTMENT      29 

considerable  amount  of  time  to  the  study  of  the  specifications, 
and  in  just  a  week  he  submitted  a  masterly  criticism  of  the 
whole  schedule. 

He  criticized  the  size  and  location  of  the  power  plant, 
recommended  the  substitution  of  electric  for  oil-burning  fur- 
naces, and  justified  his  recommendation  by  statistics.  He 
recommended  a  new  type  of  furnace  door  lining,  and  cited 
the  theoretical  saving  it  would  effect;  called  attention  to  the 
insufficiency  of  the  space  allotted  to  the  employees'  dining 
and  recreation  rooms,  and  suggested  wider  alleys  for  truck- 
ing materials. 

So  complete  and  comprehensive  was  this  analysis  that  John 
decided  to  refer  to  him  a  number  of  similar  files.  The  result 
of  the  visit  was  that  Buyer  D  was  made  Assistant  General 
Purchasing  Agent  at  an  increased  salary.  Apparently  the 
only  thing  necessary  to  bring  out  this  man's  dormant  powers 
was  the  demand  for  extra  service. 

The  Impulsive  Buyer. — The  next  branch  buyer  John 
Smith  called  upon  was  a  young  man  whose  general  record  was 
good,  but  who  occasionally  made  grave  errors  in  judgment. 
He  would,  however,  go  along  for  months  at  a  time,  turning 
out  an  amazing  quantity  of  work  of  high  quality.  He  had 
been  favourably  considered  for  promotion  on  several  occa- 
sions. Every  time  the  president  of  his  firm  had  about  decided 
he  had  finally  found  his  feet,  he  would  make  a  bad  error  in 
judgment.  John  Smith  had  a  feeling  that  this  man  would 
probably  present  more  of  a  problem  than  had  any  of  the 
other  buyers,  so  he  deferred  calling  upon  him  until  next  to 
the  last.  He  felt  that  this  man  could  be  developed  into  one 
of  the  most  valuable  assistants  on  the  list,  if  he  could  only 
devise  some  means  of  preventing  a  recurrence  of  these 
mistakes. 

Value  of  a  Good  Chief  Clerk. — ^Accordingly,  Smith  ar- 
ranged to  make  Factory  E  his  headquarters  for  a  few  weeks. 
In  order  to  study  this  buyer  at  close  range.  It  just  happened 
that  Buyer  E  had  a  very  good  chief  clerk,  who  checked  over 
his  most  important  transactions  with  him.  This  chief  clerk 
was  a  woman  who  had  been  with  the  firm  for  many  years, 
and  had  a  firm  grasp  of  the  details  of  the  office. 

Smith  had  not  been  working  alongside  the  buyer  for  E 
Plant  very  long  before  he  noticed  that  he  never  spent  much 
time  in  the  analysis  of  any  problem.     He  also  noted  that  the 


30     PURCHASING  PRINCIPLES  AND  PRACTICES 

chief  clerk  not  only  checked  over  all  the  orders  after  they 
had  been  typed,  and  before  they  were  mailed,  but  that  she 
usually  took  the  time  to  check  over  carefully  all  the  papers 
relating  to  the  purchase  before  she  brought  the  order  in  for 
signature. 

Occasionally,  however,  the  purchasing  agent  would  deter- 
mine upon  a  purchase  while  the  chief  clerk  was  out  of  the 
office,  and  would  have  the  order  typed,  signed,  and  sent  out 
before  she  returned.  After  Smith  had  been  watching  this 
buyer  for  a  week,  he  closed  up  a  purchase  of  one  thousand 
inner  tubes,  "like  sample  submitted,"  at  a  very  low  price. 
The  order  did  not  carry  any  other  specifications,  and  the 
salesman  was  permitted  to  carry  the  sample  away  with  him. 
When  the  material  was  delivered,  the  quality  was  so  poor 
that  the  whole  lot  had  to  be  refused.  This  led  to  a  long 
discussion,    and   a   lawsuit   was   narrowly   averted. 

Apparently,  this  buyer  belonged  to  that  rather  large  group 
of  men  who  feel  that  they  have  attained  a  position  where  it 
is  just  a  bit  beneath  them  to  check  over  details  carefully.  He 
had  forgotten  that  success  is  generally  the  result  of  the  con- 
sistent  exercise   of   an    infinite   capacity    for   detail. 

The  Importance  of  Detail. — As  soon  as  Smith  was  satis- 
fied that  he  had  hit  upon  the  true  reason  for  these  unfortu- 
nate errors,  he  asked  the  President  for  a  careful  analysis  of 
this  man's  history,  and  a  statement  of  the  several  occasions 
when  this  man's  name  had  come  up  for  discussion,  both 
favourable  and  otherwise  and  the  many  times  that  he  had 
been  considered  for  promotion. 

With  this  record  before  him,  he  asked  the  buyer  to  return 
to  the  office  after  luncheon  the  next  Saturday  afternoon,  in 
order  to  check  over  some  details  before  he  left  town.  He 
wanted  to  talk  with  this  buyer  when  he  would  not  be  inter- 
rupted, and  he  wanted  to  talk  with  him  on  Saturday  afternoon 
in  order  to  give  him  Sunday  to  think  things  over. 

Tactful  Talk  Succeeds.^ — When  they  were  alone  in  the 
office,  John  Smith  said  that  he  had  been  trying  for  weeks  to 
find  out  why  a  man  possessing  "E's"  ability  was  still  only 
purchasing  agent  for  a  branch,  when  men  who  had  much  less 
ability  were  heading  their  own  concerns.  He  had  looked  up 
his  record  and  had  found  that  on  three  occasions  the  direct- 
ors of  his  concern  had  been  upon  the  verge  of  electing  him  a 
vice-president,  but  that  each  time  he  had  lost  the  promotion 


TYPICAL    PURCHASING   DEPARTMENT      31 

because  of  an  unfortunate  error  in  judgment.  He  had  been 
studying  him  carefully,  and  had  come  to  the  conclusion  that 
the  reason  for  these  unfortunate  errors  was  his  distaste  for 
details,  and  his  apparent  feeling  that  his  time  was  too  valua- 
ble to  spend  upon  them.  He  was  convinced,  he  said,  that  it 
was  not  yet  too  late  for  him  to  achieve  this  promotion,  but 
it  would  be  necessary  for  him  to  demonstrate  that  he  could 
and  would  handle  all  essential  details,  in  order  to  make  sure 
that  he  would  not  repeat  these  expensive  errors.  That  was 
more  than  a  year  ago,  and  this  buyer  is  now  in  line  for  the 
next  official  vacancy. 

The  Buyer  with  Family  Worries. — The  last  buyer  Smith 
had  to  check  up  presented  a  new  sort  of  problem.  The  man 
had  been  with  his  company  for  many  years,  and  had  originally 
been  one  of  the  most  promising  men  in  the  official  family. 
During  the  last  two  years  he  had  apparently  been  worried  by 
affairs  at  home,  and  the  quality  of  his  work  had  suffered. 
His  income  was  modest,  and  his  family  were  not  only  using 
all  his  salary,  but  they  were  continually  asking  him  for  things 
that  he  could  not  afford  to  purchase.  Living  expenses  in 
that  city  were  very  high,  and  the  man  was  having  a  hard 
time  making  ends  meet.  His  wife  and  daughters  had  got 
in  with  rather  a  fast  set  and  they  were,  no  doubt,  living 
beyond  their  income. 

Without  saying  anything  to  the  buyer.  Smith  arranged  to 
have  him  transferred  to  one  of  the  other  factories  where  the 
living  expenses  would  b,e  somewhat  smaller,  and  where  he 
could  earn  a  larger  salary.  With  the  slightly  greater  income 
and  the  smaller  living  expenses,  with  the  wife  and  daughters 
separated  from  their  extravagant  friends  and  neighbours. 
Smith  was  confident  this  buyer  would  get  a  new  grip  upon 
himself.  When  Smith  visited  him  in  his  new  location  six 
months  later,  he  looked  like  a  new  man,  and  seemed  to  be 
able  to  turn  out  twice  as  much  work  with  half  the  effort. 

The  Coordinated  Purchase  Machine. — Now  that  John 
Smith  had  visited  the  buyers  for  all  the  plants  he  felt 
that  he  had  one  of  the  most  efficient  buying  forces  in  the 
country.  The  next  problem  was  so  to  coordinate  the  purchases 
of  these  branches  that  each  plant  could  take  advantage  of  the 
most  expert  knowledge  in  the  whole  organization. 

He  learned  that  the  buyer  at  Plant  A  was  a  coal  enthusiast. 
The  buyer  at  Plant  B  was  a  student  of  rubber  goods,  and  C 


32     PURCHASING  PRINCIPLES  AND  PRACTICES 

was  most  interested  in  machinery.  Upon  going  over  the  list 
of  the  most  important  items  he  was  able  to  assign  each  one 
of  them  to  one  of  the  buyers.  The  result  of  this  new  division 
of  work  was  that  each  local  buyer  continued  to  handle  the 
routine  purchases  for  his  particular  plant,  and  in  addition  he 
submitted  specific  recommendations  for  the  purchases  of  cer- 
tain items  for  all  the  plants. 

Capitalizing  Enthusiasm, — In  this  way  the  general  pur- 
chasing agent  had  the  advantage  of  the  experience  and  the 
enthusiastic  cooperation  of  one  or  more  of  his  assistants  in  the 
purchase  of  each  important  item  for  all  the  plants.  All  these 
more  important  purchases  were  of  course  referred  to  the  gen- 
eral purchasing  agent  before  negotiations  were  completed.  In 
addition  to  this  valuable  assistance,  he  developed  a  spirit  of 
friendly  rivalry  that  went  a  long  way  toward  the  reduction  of 
material  costs,  without  in  any  way  reducing  quality,  and 
without  tying  up  large  amounts  of  money  in  inventories. 


Chapter  IV 

QUALIFICATIONS  FOR  SUCCESS 

Requirements  Are  Exacting. — In  the  last  chapter  we 
pointed  out  some  of  the  handicaps  under  which  some  pur- 
chasing agents  have  to  work.  Perhaps  It  would  be  well  now 
to  list  the  qualifications  for  a  successful  purchasing  agent. 
In  attempting  to  draw  up  specifications  for  a  purchasing 
agent,  I  find  that  the  requirements  are  so  rigid  that  any  man 
who  could  measure  up  would  be  assured  of  at  least  a  modest 
success  in  any  line  of  business.  The  business  of  spending 
other  people's  money  is  so  exacting,  calls  for  so  many  varied 
qualities,  and  for  so  much  specialized  information,  that  few 
can  achieve  the  high  standard  set  for  the  really  successful 
purchasing  agent. 

Education  Essential. — The  man  who  is  really  qualified 
must  of  necessity  know  a  great  deal  about  the  things  he  pur- 
chases. It  Is,  of  course,  true  that  there  are  many  purchasing 
agents  who  are  not  well  Informed,  You  will  find  many 
bluffers  in  every  line.  Sooner  or  later,  however,  these  men 
are  found  out,  although  if  they  last  long  enough  they  may 
acquire  knowledge  and  experience. 

The  successful  purchasing  agent  must  be  well  educated. 
This  does  not  necessarily  mean  that  he  must  be  a  graduate  of 
a  university  or  college.  There  are  a  great  many  well  educated 
people  who  have  never  attended  college.  There  are  even 
some  well  educated  men  whose  school  days  ended  in  the 
eighth  grade.  These  men  have,  however,  acquired  a  high 
degree  of  education  because  they  have  continued  to  learn,  and 
have  retained  the  attitude  of  the  student  throughout  their 
entire  business  lives. 

Integrity  Essential. — No  doubt  some  of  my  readers  feci 
that  integrity  should  have  been  listed  as  the  first  qualification. 
It  is  of  prime  importance  that  the  purchasing  agent  be  pos- 
sessed of  a  brand  of  Integrity  that  Is  beyond  question.  I  have 
placed  training  first  because  it  is  possible  for  a  trained 
man  to  serve  his  firm  rather  well,  for  at  least  a  short  time, 

33 


34     PURCHASING  PRINCIPLES  AND  PRACTICES 

even  if  he  is  not  honest.  If  he  is  honest,  but  is  wholly  lacking 
in  training  he  will  lose  money  for  his  firm  every  day.  I  am 
assuming  that  the  untrained  man  is  untrained  because  he 
lacks  either  the  desire  or  the  capacity  for  study.  Many  men 
who  possess  a  degree  of  training,  but  who  are  not  experienced 
in  the  work  of  the  purchasing  agent,  are  so  pugnaciously  hon- 
est that  the  effect  upon  the  men  with  whom  they  do  business 
is  bad  rather  than  otherwise. 

Even  Temper  Essential. — To  the  uninitiated  it  might 
seem  that  the  buyer  has  all  the  cards  in  his  hand,  and  that  he, 
if  anyone,  can  afford  to  lose  his  temper.  They  feel  that  in 
the  encounter  the  man  who  is  trying  to  sell  the  purchasing 
agent  must  have  a  good  deal  of  self-control,  but  the  buyer 
can  do  about  as  he  pleases.  There  are  many  salesmen  who 
feel  that  the  purchasing  agent  is  placed  in  his  position  to 
make  it  difficult  for  them.  They  resent  his  very  existence, 
and  often  deliberately  bait  him. 

It  takes  a  good  deal  of  self-control  to  be  courteous  to  the 
carbon  paper  salesman  who  insists  upon  talking  his  wares 
when  he  is  the  fifth  such  salesman  that  morning,  and  when  the 
buyer's  desk  is  piled  high  with  papers  demanding  attention. 
It  takes  a  fairly  level  head  to  listen  to  his  chatter  while  you 
are  trying  to  sign  your  mail  and  to  answer  two  or  three  tele- 
phone calls  at  the  same  time.  It  takes  a  man  with  an  even 
temper  to  keep  from  expressing  his  opinions  in  forcible  lan- 
guage when  the  manufacturer  refuses  to  sell  him  because  the 
jobbers  have  filed  a  complaint.  Many  times  it  would  be  a 
relief  to  tell  the  disgruntled  vendor  who  has  lost  the  order 
just  what  you  think  of  a  poor  loser.  Perhaps  the  frank  ex- 
pression of  your  feelings  in  this  matter  would  be  justified,  but 
as  a  matter  of  policy  it  pays  to  keep  that  sort  of  information 
to  yourself.  As  a  matter  of  fact,  it  pays  to  keep  all  your 
information  to  yourself  in  talking  with  salesmen. 

In  the  last  analysis  the  purchasing  agent  is  just  as  depend- 
ent upon  the  good  will  of  the  salesman  as  the  salesman  is  de- 
pendent upon  the  good  will  of  the  purchasing  agent.  One  of 
the  best  ways  to  lose  the  friendship  of  the  men  with  whom  you 
do  business  is  to  tell  them  exactly  what  you  think  of  some  of 
their  business  tactics.  The  really  valuable  purchasing  agent 
must,  therefore,  be  even  tempered  and  self-controlled. 

Must  Be  Friendly — One  of  the  most  valuable  assets  any 
man  can  possess,  whether  he  be  a  purchasing  agent  or  not,  is 


QUALIFICATIONS  FOR  SUCCESS  35 

friendliness.  Some  people  call  a  man  gifted  in  this  way  a 
"good  mixer."  Whatever  name  you  give  it,  this  quality  of 
friendliness,  this  ability  to  get  on  well  with  people,  rests  upon 
a  genuine  liking  for  them.  If  you  like  anyone,  it  is  compara- 
tively easy  for  you  to  make  him  like  you.  If  you  do  not  like 
a  person  it  is  not  easy  for  you  to  make  him  like  you.  Many 
men  are  born  with  this  liking  for  people — just  people  in  gen- 
eral. But  many  are  sadly  lacking  in  this  quality.  It  is,  how- 
ever, a  quality  that  may  be  profitably  cultivated.  If  you  think 
uncomplimentary  things  about  any  one  it  is  not  easy  to  say 
things  that  are  complimentary.  The  cultivation  of  friendli- 
ness, therefore,  rests  upon  your  ability  so  to  control  your 
thoughts  that  you  will  habitually  think  pleasantly  about  people 
with  whom  you  come  in  contact. 

This  does  not  mean  that  you  should  shut  your  eyes  to  all 
their  faults.  There  are,  however,  some  admirable  qualities 
in  everyone.  If  you  will  diligently  search  for  these  qualities, 
and  will  strive  to  think  and  talk  about  these  traits,  you  will 
soon  find  yourself  liking  the  person  who  possesses  them.  If 
ability  to  like  people  did  not  pay  in  any  other  way.  It  would 
be  worth  while  cultivating  it  because  of  the  pleasure  you  will 
experience  from  keeping  your  thoughts  and  conversation  on 
your  more  pleasant  contacts  with  them.  This  is  merely  an- 
other way  of  saying  that  you  should  practice  the  Golden  Rule, 
because  it  pays,  and  because  It  makes  you  and  all  your  asso- 
ciates happier,  more  agreeable,  and  more  efficient. 

Keep  Your  Own  Counsel. — Many  purchasing  agents  have 
cost  their  firms  much  money  because  they  have  talked  too 
much.  It  Is  never  advisable  to  tell  what  you  are  going  to  do, 
or  buy,  until  you  have  done  It,  and  even  then  there  can  be  no 
profit  in  telling  the  world  what  you  have  done.  You  should 
be  too  busy  doing  things  to  have  any  time  to  talk  about  them. 
The  purchasing  agent  who  has  learned  to  keep  up  his  end  of 
any  conversation  and  be  agreeable,  without  telling  his  own 
affairs,  is  on  a  fair  way  to  success.  One  seldom  learns  any- 
thing while  talking.  One's  Information  Is  secured  while  lis- 
tening to  the  conversation  of  others.  If  you  will  cultivate 
the  art  of  being  a  good  listener,  you  will  never  experience 
the  embarrassment  of  having  your  plans  spoiled  because  you 
have  told  them  to  the  wrong  person  at  the  wrong  time.  If 
you  would  succeed,  then,  study,  be  self-controlled,  be  friendly, 
and  keep  your  own  counsel. 


26     PURCHASING  PRINCIPLES  AND  PRACTICES 

The  Measure  of  Success. — No  doubt  this  list  of  qualifica- 
tions might  be  lengthened,  but  in  these  five  prime  essentials 
you  have  the  foundation  for  a  successful  career.  Success  is 
measured  in  many  ways.  There  are  many  successful  pur- 
chasing agents  who  do  not  make  a  great  deal  of  money,  just 
as  there  are  many  successful  teachers  who  do  not  receive 
much  money.  Success  might  better  be  measured  as  the 
achievement  of  recognition — recognition  of  the  ability  to  do 
the  thing  one  has  set  out  to  do  a  bit  better  than  it  has  been 
done  heretofore. 


Chapter  V 

THE  ETHICS  OF  THE  PROFESSION 

Definition  and  Illustrations. — For  our  purposes  ethics  may 
be  defined  as  the  accepted  standard  of  conduct.  This  stand- 
ard of  conduct  varies  not  only  with  the  passing  years,  but  also 
with  localities,  and  even  with  groups  of  individuals  in  the 
same  general  locality.  There  was  a  time  when  it  was  con- 
sidered quite  all  right  for  a  man  to  go  wooing  with  a  club, 
and  to  drag  his  bride  into  his  cave  by  the  hair  of  her  head. 
Such  conduct  would  not  be  considered  ethical  today.  There 
was  a  time  when  it  was  quite  according  to  the  accepted  code 
of  conduct  for  the  gentry  to  conduct  private  raids 
upon  their  neighbours,  and  upon  travellers,  in  order 
to  replenish  their  own  coffers.  This  practice  is  now 
generally  frowned  upon.  There  was  a  time  when  it  was 
considered  rather  a  mark  of  weakness  to  pay  one's  debts. 
Most  people  today  feel  constrained  to  pay  at  least  most  of 
their  debts.  There  was  a  time  when  every  buyer  was  expected 
to  receive  a  secret  commission  on  the  orders  he  placed.  A 
little  later  the  unpleasant  word  "graft"  was  applied  to  this 
practice,  which  finally  became  so  obviously  out-of-line  with 
the  modern  ethical  standards  that  this  sort  of  transaction  has 
almost  disappeared.  Even  the  so-called  "honest  graft"  of 
politics  is  frowned  upon. 

Some  Lag  Behind  Ethical  Standard. — With  every  change 
in  the  ethical  standard,  there  is  always  a  larger  or  smaller 
group  of  individuals  who  lead,  and  a  group  who  lag  behind. 
The  group  in  the  lead  are  considered  Puritans,  and  the  group 
who  lag  behind  usually  do  so  because  they  have  entirely 
failed  to  sense  the  change.  The  new  attitude  of  the  modern 
purchasing  agent  toward  graft  in  all  its  forms,  and  in  its  wide 
variety  of  dress,  has  even  yet  not  been  recognized  by  certain 
members  of  the  profession,  nor  by  an  even  larger  group  of 
salesmen,  although  their  education  is  progressing. 

Sales  Tactics. — You  still  find  the  salesman  who  solicits 
orders  with  the  aid  of  silk  umbrellas  and  theatre  parties.   You 

44395 


38     PURCHASING  PRINCIPLES  AND  PRACTICES 

still  find  the  buyer  who  invites  the  salesman  to  a  quiet  little 
poker  game  at  his  home  after  he  has  been  awarded  a  large 
order.  Some  of  these  buyers  have  the  grace  to  win  only  10 
percent,  of  the  face  value  of  the  order  at  the  poker  game. 
Some  of  the  salesmen  lose  more.  The  trouble  is,  these  men 
have  simply  failed  to  recognize  the  change  in  the  accepted 
standards  of  conduct. 

Some  Industries  Lag. — In  every  change  in  the  accepted 
standards  of  conduct,  some  groups  of  individuals  lag.  This 
has  been  particularly  true  of  certain  industries.  One  of  the 
last  industries  to  make  a  concerted  attempt  to  put  its  house 
in  order  was  that  of  the  paint  and  varnish  manufacturers. 
There  are  still  some  flagrant  cases  of  commercial  bribery  in 
this  line  of  business,  but  the  Federal  Trade  Commission  is 
making  it  so  unpleasant  for  the  offenders  that  even  they  will 
have  to  conduct  their  business  more  nearly  in  accord  with  the 
accepted  standards  of  business  conduct  in  the  near  future. 

Department  of  Justice  Prods  the  Laggards. — Both  the 
Federal  Trade  Commission  and  the  Department  of  Justice 
have  helped  materially  in  speeding  up  this  process  of  the 
ethical  readjustment  of  business  habits  for  many  firms  and 
groups  of  firms,  as  is  evidenced  by  the  following  notices  taken 
from  trade  journals: 

Exhibit  A. — Extract  from  "Drug  and  Chemical  Markets 
Magazine,"  Jan.  7,  1920. 

DAMAGES  FOR  COMMERCIAL  BRIBERY 

The    Woolen  Mills  has  recovered  $25,000  from  the    Soap 

Co.,  of  Boston,  in  a  suit  involving  the  question  of  bribery  of  employees  of 
the  Company.  The  Company  also  sued  ,  former  super- 
intendent, and  obtained  a  judgment  for  $16,000,  being  the  amount  of  com- 
missions received  by  him.  The  bribed  employees  were  sentenced  to  three 
months  in  jail  and  were  also  heavily  fined. 

The  suits  were  brought  about  by  the  Department  of  Justice.  Officers  of 
the  Soap  Mfg.  Co.  were  indicted  on  a  charge  of  conspiracy  to  vio- 
late a  section  of  the  postal  laws  prohibiting  the  use  of  the  mails  in  further- 
ance of  a  scheme  to  defraud.  It  was  decided  by  the  Court  that  an  arrange- 
ment to  pay  graft  is  a  scheme  to  defraud  the  employer. 

Exhibit  B. — Extract  from  "Purchasing  Agent,"  August, 
1921,  p.  58. 

TRADE  COMMISSION  CITES  GLUE  MANUFACTURER 
A  complaint  was  recently  issued  by  the   Federal  Trade  Commission   against 

,    Philadelphia,    covering    an    alleged    violation    of    Section 

5  of  the  Federal  Trade  Commission  Act.  Specifically  the  complaint  charges 
the  firm  mentioned  with  giving  cash  commissions  or  gratuities,  usually  amount- 


THE  ETHICS  OF  THE  PROFESSION  39 

ing  to  5  cents  a  pound,  to  superintendents,  and  other  employees  of  cabinet 
manufacturing  plants,  without  the  knowledge  and  consent  of  the  employers,  to 
influence  the  purchase  of  the  products  of  the  respondent.  The  complaint  goes 
on  to  say  that  the  total  sales  of  glue  by  the  respondent  exceed  $500,000 
annually,  and  that  gratuities  given  to  the  superintendent  and  other  employees 
of  one  of  its  customers ,  during  the  two-year  period  ending  Jan- 
uary 1st,   1921,  aggregated  approximately  $34,000. 

The  company  in  question  was  required  to   file   an   answer  to  the  complaint 
within  thirty  days  of  its  issuance. 

It  is  unfortunate  that  there  are  always  a  large  number  of 
people  who  think  almost  anything  is  all  right  until  they  get 
caught.  For  them  the  activities  of  the  Federal  Trade  Com- 
mission and  the  Department  of  Justice  will  prove  a  powerful 
and  beneficial  stimulus.  For  the  great  body  of  salesmen  and 
representatives,  such  examples  are  entirely  unnecessary. 

Liars  Will  Come  to  Grief. — There  are  a  good  many  prac- 
tices in  certain  lines  of  business,  however,  that  are  not  sub- 
ject to  the  jurisdiction  of  either  the  Federal  Trade  Commis- 
sion or  the  Department  of  Justice,  yet  are  just  as  much  to  be 
censured.  The  practice  of  telling  anything  that  is  not  true 
for  any  purpose  is  not  in  accordance  with  the  present  stand- 
ards of  ethical  conduct.  The  purchasing  agent  who  permits 
himself  to  make  a  statement  that  he  knows  is  not  true  will 
sooner  or  later  come  to  grief.  There  are  mighty  few  men 
who  can  tell  a  lie  in  a  convincing  manner,  and  even  fewer  who 
have  sufficient  mental  agility  to  keep  up  with  the  lies  they 
tell. 

One  of  the  best  trade  assets  any  purchasing  agent  can  ac- 
quire is  the  reputation  for  never  overstating  anything.  It  is 
decidedly  better  to  have  the  reputation  for  conservative 
statements  than  for  even  a  small  group  of  your  business  ac- 
quaintances to  feel -that  you  occasionally  colour  a  statement  to 
make  it  serve  your  ends  better.  Because  you  want  to  acquire 
the  reputation  for  always  doing  the  thing  that  you  say  you 
are  going  to  do  and  because  you  do  not  want  to  be  in  the 
position  of  just  doing  a  thing  because  you  said  you  were  going 
to  do  it,  it  is  well  for  you  to  be  very  reluctant  to  make  any 
definite  statement  or  any  definite  promise.  Many  of  the 
promises  made  by  the  purchasing  agent  in  an  honest  en- 
deavour to  help  someone  else  out  cause  him  more  worry  and 
grief  than  they  save. 

Securing  Inside  Information. — Many  salesmen  use  sales 
methods  that  are  not  ethical,  but  that  does  not  justify  the 


40     PURCHASING  PRINCIPLES  AND  PRACTICES 

purchasing  agent  In  resorting  to  similar  tactics.  Many  sales- 
men deliberately  "pump"  the  stores  and  clerical  forces  in 
order  to  secure  inside  Information,  and  use  this  knowledge 
to  their  own  advantage,  and  to  the  disadvantage  of  the  pur- 
chasing agent. 

That  does  not  justify  the  purchasing  agent  in  reading  the 
salesman's  confidential  price  Instructions  when  he  Inadvert- 
ently leaves  his  bag  In  the  buyer's  office.  Even  If  there  were 
no  ethical  question  involved,  there  would  always  be  the  pos- 
sibility that  the  salesman  left  these  papers  in  your  office  In  the 
expectation  that  you  would  seize  the  opportunity  to  read  them, 
and  be  guided  by  the  Information  they  contain. 

When  Bids  Are  Confidential. — Most  public  institutions  are 
required  by  law  either  to  print  or  exhibit  upon  demand  the 
bids  received  on  any  large  job.  With  exceptions  of  that  sort, 
there  cannot  be  any  possible  justification  for  any  purchasing 
agent  telling  any  salesman  what  his  competitor  has  bid  on  any 
job.  It  is  true  that  In  many  cases  the  salesman  has  so  many 
of  the  facts  In  hand  from  other  sources  that  he  can  guess 
accurately  what  the  other  man  has  bid.  We  cannot  very  well 
keep  him  from  guessing,  and  there  can  be  no  harm  in  telling 
him  that  his  quotation  is  high,  if  it  is,  but  the  purchasing  agent 
who  gets  the  reputation  of  revealing  to  salesmen  the  quota- 
tions of  their  competitors  might  just  as  well  begin  to  look  for 
some  other  sort  of  work,  because  his  days  as  a  purchasing 
agent  are  numbered. 


Chapter  VI 

THE  MECHANICS  OF  THE  PROFESSION 

This  Is  of  Secondary  Importance. — It  is  my  firm  belief 
that  the  importance  of  the  mere  mechanics  of  purchasing  is 
usually  overemphasized.  It  is  true  that  a  cumbersome  system 
may  be  unduly  expensive  to  maintain,  and  it  is  also  true  that 
an  incomplete  system  may  lead  to  both  inconvenience  and 
delay,  and  may  in  some  cases  cause  financial  loss.  In  every 
case,  however,  the  system  which  will  make  the  greatest  return 
for  each  dollar  of  operating  cost  must  be  determined  very 
largely  by  the  type  of  personnel. 

If  the  men  in  charge  of  the  various  divisions  of  the  depart- 
ment can  furnish  the  required  data  when  needed,  and  if  the 
cost  per  thousand  orders  compares  favorably  with  the  cost 
of  similar  departments  In  other  organizations,  I  am  not  sure 
that  one  is  justified  In  requiring  much  more.  In  any  case, 
any  change  which  may  be  proposed  should  be  made  only  after 
the  individuals  whom  it  affects  have  been  thoroughly  sold  to 
the  idea.  There  is  much  more  profit  In  keeping  a  contented 
happy  worker  in  charge  of  a  system  that  leaves  something  to 
be  desired  than  there  Is  in  Installing  a  perfect  system,  against 
the  wishes  of  the  worker  who  must  use  It. 

Consider  the  Worker's  Viewpoint. — Many  an  excellent 
chef  will  open  a  can  of  tomatoes  quicker  and  more  easily  with 
a.  meat  cleaver  than  he  will  with  a  patent  can-opener.  If  you 
dislike  the  cleaver  method,  sooner  or  later  you  must  either 
really  sell  him  the  newfangled  contrivance,  or  you  must  em- 
ploy a  new  chef.  If  you  can't  sell  the  new  system  to  the  work- 
ers, and  the  system  will  save  less  than  It  will  cost  to  replace 
the  present  workers,  it  Is  much  better  to  limp  along  with  the 
present  system.  If  you  cannot  really  sell  them  the  new  sys- 
tem, perhaps  it  Is  not  as  perfect  as  you  think. 

In  the  last  analysis,  the  necessary  routine  for  conducting 
the  work  of  the  modern  purchasing  department  is  very  simple. 
The  best  method  of  approach  is  not  to  build  the  system  and 
foist  it  upon  the  organization,  but  rather  to  determine  first 

41 


42     PURCHASING  PRINCIPLES  AND  PRACTICES 

the  requirements  of  the  organization,  and  then  build  the  sim- 
plest possible  system  that  will  perform  the  required  service. 
System  is  an  excellent  servant  but  may  become  a  very  hard 
master. 

Genesis  of  the  Purchase. — As  most  demands  for  material 
arise  outside  the  purchasing  department,  some  sort  of  "re- 
quest to  purchase"  form  must  be  provided.  Just  what  size 
these  should  be,  just  how  many  copies  should  be  made,  and 
to  whom  they  should  be  forwarded,  and  by  what  officials  they 
should  be  approved  before  they  reach  the  purchasing  agent, 
will  depend  entirely  upon  the  lines  of  authority,  and  the  size 
and  kind  of  organization. 

Make  the  Form  Fit  the  Job. — If  the  man  who  requires  the 
material  is  a  construction  foreman,  he  will  prefer  to  have  the 
request  to  purchase  in  the  form  of  a  pocket  size  duplicate 
order  book.  For  this  sort  of  work,  perhaps  he  will  require 
three  copies,  one  for  the  purchasing  agent,  one  for  the  general 
superintendent,  and  one  for  his  own  records,  with,  perhaps, 
a  fourth  copy  for  the  storekeeper. 

Where  there  is  no  continuous  flow  of  emergency  orders, 
the  request  to  purchase  is  usually  made  in  duplicate;  one 
copy  to  be  routed  through  the  hands  of  the  storekeeper  and 
the  various  executives  to  the  purchasing  agent,  and  one  for 
the  man  who  needs  the  material. 

Forms  for  Office  Supplies. — If  most  requests  originate  in 
offices  and  the  forms  do  not  need  to  be  pocket  size,  there  are 
many  advantages  in  having  these  forms  8^4  x  11.  As  most 
quotations  and  most  correspondence  concerning  a  specific  pur- 
chase are  on  sheets  8^  x  11,.  it  is  very  convenient  to  fasten  to- 
gether, or  put  in  a  correspondence  size  folder,  all  the  papers 
relating  to  a  specific  purchase. 

These  papers  may  then  be  filed  either  numerically,  under 
a  request  to  purchase  series  of  numbers;  numerically,  by  de- 
partmental requests  according  to  purchase  order  numbers; 
or  alphabetically,  by  firms  or  commodities. 

Where  the  file  of  pending  orders  is  not  large,  there  are 
many  advantages  in  giving  the  request  to  purchase,  the  num- 
ber of  the  purchase  order.  These  may  then  be  filed  numer- 
ically, and  located  and  refiled  with  the  minimum  amount  of 
effort. 

Quotation  Forms. — In  many  cases  orders  may  be  placed  to 
advantage  only  after  quotations  have  been  secured  from  sev- 


THE  MECHANICS  OF  THE  PROFESSION      43 

eral  firms.  Some  firms  prefer  to  use  a  letter  in  requesting 
quotations.  In  most  cases,  however,  a  quotation  form  is 
preferable. 

The  main  requirements  of  the  request  for  quotation  form 
is  that  it  be  of  standard  size — preferably  Sy^  x  11 — and  that 
it  show  plainly  what  it  is,  a  request  for  quotation,  and  not  an 
order. 

While  these  orders  are  pending,  the  original  request  to  pur- 
chase and  the  other  papers  should  be  held  in  the  quotation 
file.  The  method  of  filing  these  requests  will  depend  very 
largely  upon  the  number  of  open  jobs.  In  most  purchasing 
departments,  these  may  be  kept  in  a  single  pending  folder. 

When  the  quotations  have  been  assembled  and  analyzed,  the 
order  is  ready  to  place.  The  number  of  order  copies  you  will 
need  will  depend  entirely  upon  the  size  and  kind  of  organiza- 
tion, and  the  personnel. 

Swift  &  Company's  System. — The  purchasing  department 
of  Swift  &  Company  handles  most  of  their  purchases  without 
issuing  confirming  orders.  They  give  the  vendor  the  number 
on  the  request  to  purchase  (order  number),  and  note  the  price 
and  delivery  date  on  this  original  request. 

Any  department  ordering  supplies  makes  out  a  purchase 
requisition  or  supply  order  in  triplicate  (original  is  white,  dupli- 
cate is  pink,  and  triplicate  green),  sending  It  to  the  superin- 
tendent's office,  where  a  record  is  kept  of  stock  on  hand, 
time  It  will  last,  date  of  last  order,  etc.  This  is  done  In  order 
to  control  the  supplies  being  carried  in  departments.  After 
being  recorded  and  approved,  all  three  copies  arc  forwarded 
to  the  receiving  office,  where  they  are  numbered.     The  green 


ftme<» 

DEPX-'Na 

SBND  oniaiHAL  AND  BuPUCATe  10  necciviNa  departucnt 

SUPPLY  ORDER                 NO. 

OH 
HAND 

PRESENT 

STOCK 
WIUUST 

DLEAse 

^PURCHASE  FOB  _.                                                                                ncPT        nATr                                     laa 

W6KT.  or  NO. 

nucf 

OISCOUNT 

««0 

in 

N0T5.         The  original  Is  printed  on 

the  triplicate  on  ffreen,    the    form  Is 

the   sane  oa  all. 

r                                               Kd. 

1 

F.  0.  B. 

OAtt  WANTED 

Orderad  by 

BOUGHT  OF 

ApprovAd  fof 
PurolnM  by 

44     PURCHASING  PRINCIPLES  AND  PRACTICES 

copy  is  returned  to  the  department  as  their  permanent  record, 
the  white  original  is  forwarded  to  the  purchasing  department 
for  the  purchase  of  the  material,  the  pink  is  kept  in  the  receiv- 
ing office  on  file  numerically  as  a  permanent  record. 

After  the  purchase  of  the  supplies,  the  order  is  returned  to 
the  receiving  office  from  the  purchasing  department,  and  the 
information  contained  thereon  is  inserted  on  the  pink  copy, 
so  that  the  receiving  office  will  have  a  complete  permanent 
record  on  file,  showing  from  whom  bought,  price  f.  o.  b. 
and  terms.  When  delivery  is  made,  the  date  of  delivery 
and  ticket  number  is  also  shown  on  this  copy. 

From  Delivery  to  Payment. — When  goods  are  delivered 
to  the  Swift  &  Co.  plant,  the  teamster  presents  the  shipping 
memorandum  showing  the  contents  of  the  load.  The  advice  of 
receipt  blank  is  made  out  in  quadruplicate,  the  first  three 
copies  going  with  the  teamster,  and  the  fourth  copy  remaining 
in  the  possession  of  the  receiving  office,  as  a  check  to  see  that 
the  ticket  Is  returned.  The  teamster  brings  back  the  third  copy, 
duly  signed  by  the  department,  as  evidence  that  the  load  has 
been  delivered,  leaving  the  original  and  duplicate  In  the  de- 
partment. 


ADVICE  OF   RECEIPT 
FOR  INSTRUCTIONS  SEE   REVERSE   SIDE 


N9     20914 


DELIVER   TO 

CHARGE-SUPPLIES 

THE   FOLLOWING 

STOCK—  RAW 

STOCK-MNFG. 

ESTIMATED   WEIGHT 

ru«CH.5i.»c.c» 

.=OV.^=OOOS^S.^~T^T^O  .OUH  .^P.«,M..^,  T^^^^^                               .~0                ^M.T^^                 ,„^, 

DIS- 

AM9UNT 

UUVKt       Ihe  orlglQ&l  is  printed  en 

^Ite  ttook.  the  danlloate  and  triplicate 

ar«  on  7ella«.     Iha  fara  is  the  same  on  all. 

1 

INITIAL 

CAR  No 

ssSn?  r."ojA°  rxro""" 

DATE  UNLOADED 

="ROM 

D.P..TMSNT  FOXEMAH 

F.O   B. 

HOW  RECEIVED 

PASSED  BY  RECEIVINU  OrFICb 

DEMURRASE STARTS 

T/ONo. 

FRT,  OR  EXP.  CHGS. 

RECEIVim  C 

LIRK 

1 

■  POR  IHSTHUCTION* 


THE  MECHANICS  OF  THE  PROFESSION      45 

The  department  then  inserts  the  weights,  description,  etc., 
on  the  original,  which  is  picked  up  daily  by  the  receiving  office 
messenger.  The  second  copy  remains  in  the  department's 
possession  as  their  record.  After  the  original  is  returned  to 
the  receiving  office,  it  is  matched  against  the  third  copy, 
which,  as  stated  above,  is  evidence  of  delivery  of  the  load  in 
question. 

At  this  point  the  original  supply  order  is  taken  from  the 
file  and  attached  to  the  advice  of  receipt  delivery  ticket,  and 
goes  to  the  auditor  as  his  authority  to  make  payment. 

At  the  proper  time  in  the  receiving  office,  notation  is  made 
on  the  advice  of  receipt  notice,  of  the  name  of  the  firm  from 
whom  the  purchase  was  made,  and  whether  the  shipment  was 
a  carload,  wagonload,  or  was  received  by  express,  team,  parcel 
post,  etc.,  with  charges  paid,  If  any. 

This  system  has  been  in  force  for  many  years,  and  works 
admirably.  By  this  method  the  purchasing  department  is 
relieved  of  all  office  routine,  and  the  buyers  become  much 
more  expert  along  their  several  lines. 

Wilson  &  Co.'s  System. — Wilson  &  Co.  use  a  somewhat 
different  system,  although  their  line  of  business  is  similar. 
Wilson's  system  is  described  in  the  following  statement  by 
E.  B.  Kitzinger,  General  Purchasing  Agent  of  Wilson  &  Co., 
under  date  of  January  12,  1922: 

"All  purchases  are  made  from  requisitions  furnished  by  the 
department  foremen  and  the  general  store  room  after  they 
have  been  approved  by  the  plant  superintendent.  These  requi- 
sitions specify  the  commodities  wanted  and  when  needed;  also 
the  stock  on  hand  and  how  long  the  stock  will  last;  thereby 
giving  both  the  buyer  and  the  superintendent  a  guide  with 
which  to  see  that  the  quantities  are  proper  and  not  excessive. 
The  requisitions  are  furnished  the  purchasing  department  on 
a  form  known  as  'Foreman's  Purchase  Requisition.' 

"Inquiries  for  prices  on  all  commodities  are  sent  broadcast 
to  sellers  in  logical  territories  so  as  to  give  a  broad  field  to  the 
competition. 

"In  awarding  contracts,  quality  is  given  first  consideration; 
also  price,  delivery,  specifications  and  other  conditions  which 
may  relate  especially  to  the  commodity  in  question.  There- 
fore, price  Is  not  the  sole  determining  factor. 

"After  orders  have  been  placed  and  foremen's  requisitions 
properly  filled  out  showing  the  prices,  terms,  and  proper  sped- 


46     PURCHASING  PRINCIPLES  AND  PRACTICES 


FOREMAN'S 
PURCHASE 
REQUISITION        Approved  Estimate  No. 


Rei.  No. 
Date 


on  HMD 

Dm 

•  r*d 

«M<«1 

finntptn  tna                                                         ruianr  ti; 

"■' 

.... 

"^' 

1 

FOB  PHICa  ONLV 

ThlB  part  Is  made  oat  by  Bepartmaot  Foraman 

who  Bends  it  to  Superlntendant's  Office 

for  approTal.     Then  It  Is  sent  to   the  Pur- 

S 
3 

ohasung  Agant  who  approves  it  and  frtves  to 

o 

Buyer, 

6 

Duplleato  on  yallov  Is  retalnad  by  Dspartoant  Foreman 

f 

s 

for  hi 3  record. 

Ed. 

vrbased  (r 

(  CD 

b.  B.  < 

™ 

Purchase  A^dI's  Approval  

Ordered  by- Approved- 
Purchased  by— ^ Dale 

— 

ICAGO 

uveitD 

Cut 

Da 

To B.|..  N.I 

Supl. 

41st  St.  and  So.  Ashland  Ave. 
CHICAGO 


IM\t-"if/->^W 


IMPORTANT 

Ko   Delivery   Accepted   UolcM  Our 


r  account  on  order  No 


Confinning  order  given  Mr. 

PER 

PRICE 

TRADE  DISCOUNT 

This  part  is  qrlpinal  eonflrmation 

or  order.     It  goes  to  the  Seller. 

Ouplioata  on  yellov  la  rataload  In  the  Furcbaslnt: 

Department  for  raoord  of  oonflrmatlon. 

m. 

AKn*  natertil  mm  b»  aUpDnl  br 192 

CASH       /- 
DISCOUNT) 


— <fo Day» 

Net Days 


Purchnsitifi  Agent 


IMPORTANT    lovolcewithBUlof  Ladinsmnflt  t>e  mailed  to  u«  on  day  of  shipment.    AU  Invoice*  dAted  from  the  lOtli  to  the  26tb.laclu8)ve. 
SJ'-r-y'^  '  V:^\^     payable  flnt  of  month;  aD  from  26th  to  9th.  Incloalve.  paycble  ISth  ot  moDth.  lea«  2  per  cent  dUcount,  provided  artlclu  h 


Thla  compaoy  wJU  tutt  be  reaponaible  for  popd^ 

Ordered  for 
GbMrgcto 


Date  Req. 
Date  oi  Par. 


Ordered  by 
Purchased  by 


THE  MECHANICS  OF  THE  PROFESSION      47 

fications  of  the  comodities  bought,  they  are  then  copied  on  a 
requisition  form  consisting  of  five  copies.  The  first  copy — 
form  S-483 — is  sent  to  the  party  from  whom  purchase  is  made. 
The  second  copy  is  a  plain  sheet  and  is  retained  in  the  purchas- 
ing department  letter  file,  attached  to  complete  correspondence 
on  the  purchase.  The  third  copy — form  S-377 — after  it  has 
been  approved  by  the  purchasing  agent  for  price,  terms,  etc., 
is  sent  to  the  voucher  department  and  is  used  by  them  in  check- 
ing the  invoice.  The  fourth  copy  is  sent  to  the  receiving  de- 
partment as  a  guide  to  that  department  as  to  what  is  to  be 
received  by  them  in  order  that  not  only  proper  preparation 
can  be  made  for  the  receipt  of  material  purchased  but  also  to 
guard  against  over  deliveries  especially  on  declining  markets. 
The  fifth  copy  is  furnished  to  the  general  store  room  or  the 
department  foreman  as  a  notification  of  purchase,  also  as  a 
price  guide. 


iFonn  8377- 18M  B 


Purchasing  Department 


REQUISITION 


ABOVX  MATERIAL  TO  BE  SHIPPED  BY 


ThlB  part  goas  to  the  Voucher  Dept. 

as  their  guide  for  fayment   of  Invoice. 
Duplioats  on  ysllow  gOHS  to  Bsoelvlne  Office 
for  roeord,  and  triplicate  on  whlta  tlr.sue  eP^s 
to  Departnent  Poranan. 

Eu. 


TRADE  DUCOU^a' 


Purchased  From 


CASH         J  % D«r» 

DISCOUNT  N.I D.,. 


Ordered  for 
Chu-se  to 


D«teRec}. 
Date  of  Pur. 


Order«d  hj 

Purcbued  by 


"When  goods  arc  received,  a  receiving  report  is  made  out 
by  the  receiving  department  and  sent  to  the  voucher  depart- 
ment where  the  purchase  requisition,  the  receiving  report  and 
the  invoice  are  matched,  and  if  correct,  the  invoice  is  paid  after 
it  has  been  approved  by  the  department  foreman  for  quality  of 
goods.     It  is  thus  unnecessary  for  the  invoice  to  be  referred 


48     PURCHASING  PRINCIPLES  AND  PRACTICES 

to  the  purchasing  department  from  the  voucher  department 
unless  there  is  a  difference  in  the  price,  quaHty  or  quantity  of 
the  merchandise  received. 

"The  purchasing  department  is  also  closely  in  touch  with 
receipt  of  all  materials.  They  inspect  the  quality  and  quantity 
of  goods  received  to  see  that  they  are  in  line  with  contracts 
made.  Many  commodities  are  purchased  on  certain  required 
standards,  and  it  becomes  the  duty  of  the  receiving  department 
to  take  a  representative  sample  of  each  consignment  received 
and  refer  it  to  the  proper  department  for  test  and  deter- 
mination. 

"The  Company  maintains  a  large  laboratory  which  is  used 
to  advantage  in  analyzing  comparative  values  and  in  determin- 
ing that  deliveries  are  In  accordance  with  contract  specifications. 

"A  price  record  is  kept  in  the  purchasing  department  on  in- 
dex cards  that  are  filed  alphabetically  under  the  names  of  the 
commodities.  These  cards  provide  space  for  price,  discount, 
terms,  from  whom  purchase  is  made  and  the  quantity 
bought,  which  information  Is  copied  from  the  foreman's  requi- 
sition after  purchase  has  been  completed. 

"Foremen's  requisitions  are  then  filed  in  the  purchasing  de- 
partment for  future  reference." 

Disposition  of  Purchase  Order  Copies. — ^This  complete 
system  fits  the  personnel  and  the  requirements  just  as  the 
Swift  &  Co.  system  fits  their  requirements.  In  most  purchas- 
ing departments,  however,  all  orders  are  confirmed,  the  pur- 
chase order  being  issued  in  from  two  to  ten  or  more  copies. 

Obviously,  one  copy  goes  to  the  vendor,  and  one  Is  retained 
in  the  purchasing  department.  Usually  a  third  copy — often 
without  showing  the  price  or  the  quantity  ordered — goes  to 
the  stores  department.  Another  copy  may  go  to  the  depart- 
ment requesting  the  goods.  A  copy  may  go  to  the  account- 
ing department,  or  the  treasurer.  It  may  be  desirable  to  send 
copies  of  the  purchase  orders  to  several  other  ofl^cials  because 
of  the  special  requirements  of  the  various  organizations. 

Order  Index. — Obviously,  if  many  orders  are  issued,  some 
sort  of  Index  must  be  provided.  The  simplest  form  is  a  4  x  6 
card  bearing  the  name  of  the  vendor,  his  address,  'phone 
number,  and  such  other  data  as  may  be  needed — credit  rating, 
discount  terms,  name  of  salesman,  etc. — and  provided  with 
columns  in  which  the  number  of  the  purchase  orders  placed 


THE  MECHANICS  OF  THE  PROFESSION      49 

with  that  firm  may  be  listed.  For  most  purposes,  this  is  ade- 
quate. Other  columns  may,  however,  be  added  to  show  the 
item  ordered,  quantity,  date,  date  of  payment,  etc.  (See 
Order  Index  Card,  page  109.) 

Accounts  Payable  Record. — One  of  the  most  frequent 
causes  of  friction  between  the  purchasing  department  and  the 
auditing  or  accounting  department  centres  around  lost  in- 
voices. Both  departments  too  often  feel  that  their  routine  is 
so  perfect  and  their  employees  are  so  accurate  that  any  papers 
that  go  astray  do  so  because  of  the  carelessness  of  the  other 
department.  A  very  simple  remedy  for  this  trouble  is  a  dupli- 
cate accounts  payable  register  sheet. 

This  may  be  merely  a  typed  list  of  the  invoices,  one  copy 
of  which  accompanies  the  invoices  to  the  accounting  depart- 
ment, and  one  copy  of  which  is  retained  by  the  purchasing 
agent.  This  invoice  register  may,  however,  be  expanded  into 
a  very  useful  voucher  register  by  adding  suitable  columns  for 
distributing  the  charges  and  for  the  voucher  numbers. 

Price  Record  Forms. — Some  sort  of  price  record  form  is 
essential  for  the  proper  handling  of  purchases  for  any  busi- 
ness or  institution  in  normal  times.  The  purpose  of  this 
record  is  to  show  quickly  the  last  cost,  the  quantity,  and 
source  of  supply  for  each  article  purchased.  The  analysis 
of  these  records  also  easily  shows  the  total  purchases  of  that 
particular  commodity  over  any  particular  period,  in  order  to 
gauge  accurately  future  purchases.  Some  of  these  records  are 
kept  in  ledgers  or  loose-leaf  binders.  The  most  useful  form 
is,  however,  usually  found  to  be  a  4  x  6  card.  Complete 
details  of  catalogue  filing  are  set  forth  in  the  next  chapter. 

Vendor  Lists. — Every  purchasing  agent  has  experienced 
the  embarrassment  of  failing  to  recall  the  source  of  a  partic- 
ular purchase  that  he  never  expected  to  make  again,  through 
having  neglected  to  record  it.  An  excellent  remedy  for  this 
is  found  in  a  loose-leaf  pocket  size  notebook,  where  these 
important  sources,  which  are  used  only  occasionally,  are  re- 
corded under  the  name  of  the  commodity.  This  book  should 
be  in  the  purchasing  agent's  desk  at  all  times,  so  that  he  may 
quickly  make  the  necessary  entries  as  they  occur  to  him  during 
the  day.  These  data  books  should  be  revised  occasionally 
and  brought  up  to  date. 

This,  then,  is  the  skeleton  of  the  machinery  used  by  the 
purchasing  agent.     There  are  many  variations,  and  many  re- 


50     PURCHASING  PRINCIPLES  AND  PRACTICES 

finements,  but,  generally  speaking,  these  records  will  be  found 
adequate  for  conducting  an  office  handling  10,000  to  15,000 
purchase  orders  per  year. 

The  Routine  in  Brief. — For  the  benefit  of  those  whose  ac- 
tual purchasing  experience  has  been  limited,  it  will  be  of  inter- 
est to  trace  through  a  purchase  from  its  inception  to  its 
completion. 

Let  us  assume  that  the  paint  shop  receives  an  order  to 
shellac  and  varnish  the  trim  in  a  new  building.  The  paint 
foreman  estimates  that  this  job  will  require  a  hundred  gal- 
lons of  shellac,  and  one  hundred  gallons  of  varnish.  He 
makes  out  a  request  to  purchase  100  gallons  of  each  of  these 
items,  specifying  the  grade  or  brand  preferred.  This  is 
duly  approved  by  the  construction  superintendent,  and  for- 
warded either  to  the  storeroom,  or  direct  to  the  purchasing 
agent. 

It  happens  that  the  storekeeper  has  more  than  a  hundred 
gallons  of  varnish  and  half  enough  shellac  on  hand.  If  the 
requisition  comes  to  him,  he  notes  the  quantity  he  has  on  hand 
not  assigned  to  any  other  job,  and  forwards  it  to  the  pur- 
chasing agent.  If  it  goes  to  the  purchasing  agent  first,  he 
will  no  doubt  check  up  the  present  stock  with  the  storekeeper 
by  'phone. 

Calling  for  Quotations. — When  the  purchasing  agent  and 
the  storekeeper  have  agreed  upon  the  quantity  to  be  pur- 
chased, the  next  step  is  to  request  quotations.  These  re- 
quests for  quotations  may  be  made  by  mail,  or  by  telephone 
or  telegraph.  The  number  of  bids  to  be  requested,  and  the 
firms  who  may  be  asked  to  bid,  will  depend  entirely  upon  the 
judgment  of  the  purchasing  agent. 

When  the  bids  are  all  in,  the  buyer  decides  who  is  to  get 
the  order,  and  the  order  is  placed  by  'phone  and  confirmed, 
or  it  is  merely  mailed.  This,  of  course,  depends  both  upon 
the  urgency  of  the  need  and  upon  the  condition  of  the  market. 
If  the  market  is  strong  and  is  tending  upward,  naturally  most 
orders  will  be  placed  by  'phone  or  wire.  When  the  order 
is  typed  it  is  checked  by  the  chief  clerk  in  order  to  avoid  pos- 
sible errors,  and  sent  to  the  purchasing  agent  for  signature. 

The  receiving  copy  of  the  order  goes  to  the  receiving  de- 
partment in  the  stores  division,  one  copy  may  or  may  not  go 
to  the  paint  foreman,  and  one  or  two  office  copies  will  be 


THE  MECHANICS  OF  THE  PROFESSION       51 

filed.  One  office  copy  will  be  filed  in  the  open  order  file  either 
numerically  or  alphabetically.  If  there  is  another  office  copy 
it  will  be  used  to  follow  up  delivery.  The  method  of  tracing 
varies  greatly  between  offices,  and  depends  very  largely  upon 
the  type  of  organization,  the  type  of  purchases,  and  the  loca- 
tion of  the  plant. 

Environment  Affects  Details. — For  instance,  the  buyer 
for  a  large  construction  job  in  a  small  town  would  need  to 
follow  up  all  purchases  very  closely  in  order  to  insure  the  con- 
tinuous progress  of  the  job.  On  the  other  hand,  the  city 
pick-up  man  for  a  factory  in  a  large  city  would  probably  need 
to  trace  only  the  most  important  items.  When  the  goods  are 
delivered,  either  the  invoice  must  go  to  the  stores  department 
for  checking  as  to  delivery,  or  the  invoice  and  the  receiving 
slip  must  be  matched,  either  in  the  purchasing  office  or  the 
accounting  department,  preferably  the  former.  The  neces- 
sary data  must  then  be  recorded  on  the  office  copy  of  the  or- 
der, and  this  copy  then  transferred  to  the  filled  order  file — 
numerically.  The  invoice  will  then  be  certified  for  payment, 
listed  on  the  accounts  payable  sheets,  and  sent  to  the  account- 
ing department. 

There  are  many  variations  in  this  routine.  In  fact,  you 
will  rarely  find  two  offices  which  handle  the  routine  in  the  same 
manner,  but  the  basic  principles  are  pretty  much  the  same 
everywhere. 

Typical  Purchasing  Forms. — The  following  purchase 
forms  of  the  Commonwealth  Edison  Co.  of  Chicago,  and  the 
general  instructions  for  using  them  are  a  typical  example  of 
the  purchase  routine  in  large  corporations: 

The  requisition  is  written  in  triplicate,  and  after  being  signed 
by  the  Head  of  the  Department,  copies  one  and  two  are  sent 
direct  to  the  Purchasing  Department.  Copy  number  one  is  signed 
by  the  Purchasing  Agent  and  is  sent  to  the  Vice-President,  or 
Vice-Presidents,  concerned,  for  approval. 

To  avoid  being  delayed  by  waiting  for  the  approved  copy  to  be 
returned,  the  Purchasing  Department  uses  copy  two  in  prepar- 
ing to  write  the  order.  The  price  of  the  material  is  looked  up 
by  the  price  clerk,  and  entered  on  the  requisition;  or  bids  are 
secured  and  listed  in  the  spaces  provided  on  copy  two.  When 
the  vendor  is  decided  upon,  his  name  is  written  in  the  space 
provided  at  the  top  of  the  sheet.  Other  information  necessary 
for  the  purchase  order  typist  is  entered  on  this  copy,  also  at  the 
top  of  the  sheet,  so  that  it  may  all  be  seen  at  a  glance. 


52     PURCHASING  PRINCIPLES  AND  PRACTICES 

When  copy  number  one  is  returned  after  approval,  it  is  at- 
tached to  copy  number  two  and  at  once  turned  over  to  the  pur- 
chase order  typist.  There  is  thus  no  delay  in  placing  an  order, 
once  it  has  reached  the  Purchasing  Department  after  final 
approval. 

Copy  number  three  is  retained  by  the  department  ordering  the 
material,  and  space  is  provided  on  this  copy  for  any  record  the 
department  may  wish  to  make.  Each  department  is  assigned  a 
code  letter  or  code  letters  and  each  person  in  the  department 
who  writes  requisitions  is  assigned  a  number  series.  For  ex- 
ample,  the   code  letters    for  the   Contract   Department  are  CN, 


a 


RtOUISmON  ON  PURCHA51NQ  DEPARTMENT  M0_ 

TO  PURCHASING  DEPARTMENT 


.DATE. 


.19— 


THE  FOLLOWiNO   ARTICLES 
ARE  REQUIRED    FOR  THE  COMPANY 
TO  BE  CHAR6EO    TO       


C5TIM*Teo 
COST  tt- 


OELIVER  TO 


WECESSAUV  fon 


.APPROVED. 


REQUISIT'O"^       ON 
PUieCHASINg        OE.PT. 


5Eg^TEr^a£R      192' 


APPROVED 


APPi^oveo 


APPROVED 


HEAD    OF  OEPARTMENT 


VICE    PReSIOE'^TOr    ORIGtNATINO   OCPT. 


PUECMASCN^    ACjENT 


PURCHASE   ORDER  I 


VICE    PRESIOEMT  IM    CHAR6E  OF    PURCHSSIN^ 


J)/\TEO»OEReD  . 


■Size  S'/o' 


THE  MECHANICS  OF  THE  PROFESSION      53 

and  since  there  are  three  members  of  this  depaitmeiit  who  write 
requisitions,  their  numbers  run  in  sequence  from  CN  1,000, 
CN  2,000,  and  CN  3,000.  This  enables  the  department  to  know 
at  a  glance  who  has  written  any  requisition,  and  it  enables  the 
Purchasing  Department  to  recognize  easily  the  requisition  of 
any  department  and  of  any  person  in  that  department. 

Other  features  of  the  requisition  here  shown  that  are  worthy 
of  note  are:  the  large  numerals  identifying  each  sheet,  the  care- 
ful organization  of  the  sheets  so  that  only  that  information  which 
should  be  the  same  on  all  three  sheets  is  written  while  the  carbon 
is  inserted,  the  specific  information  called  for,  the  careful  desig- 
nation of  the  use  of  each  sheet,  the  spaces  on  sheet  number  one 
to  record  the  purchase  order  number  and  the  date  ordered,  and 
finally,  the  size  of  the  requisitions,  8"  x  10",  which  cuts  out  of  a 
standard  sheet  of  paper  with  no  waste. 


REVERSE   SIDE   OF  COPY    1    OF  REQUISITION    FORM 


o 

DATE 
REcetVED 

AMOUNT 

or 

^.^       l^A'OrcE 

<?uANTrry 
oiui-eo 

PURCHASE.    ORDER 

PREWAR  eo     6T 
BUREAU     OF   COMIw^cRCIaL    CCONOMICS, inc- 
SEPTEMBER.iSEl 

IMOTE 

^^             OELiveRED  V-.TMOU1  PURCHASE  ORDER 

^-/^      A                  SC^O  SEt»»RATe   INVOICE    FOR   eACM    PvR.- 
~"~V^              CMASe     ORDER      NUMBCR. 

Wll.1.  NOT    f>i,t    FOR  BOmhO.PACfMrMjOR  CARI^OE 
IF  TMig  PURCHASE  OROCR.  15  NOT  ACCEPTf  O  EX 

ACFLYAawHiTTCH.  RETURN    AT  ONCE  WITH  6* - 

PWAl^ATlON. 

IT  SHALL    BE  UNDERSTOOD  THAT    THE  C  A^M  O©- 

COUMTPtB.OOW.tU    O^TE  FROH  THE  RECEIPT 

OF  The  invoice. ahohot  FROn  tmeOATE  op 
rHE  tNvorce 

Be    OICMEO  TO  MAWe    AGREEO.TMATIMCA^E  ANVARTICLE    SOLD 
AMD  OEt-lVEREO    TO  TWI5COMPAMV  HEREUNDER  5wAt.l.  BE   PRO- 
TECTED BVANY  PATer4T  OR  COPyRlGHT.VOUV*l-l.irJDE«NlEy 
ANO  SAVE   HARMLESS  TT,1S  COMPANY  F  ROM  AND  A6AINST  ALl.  SUITA. 
CLArM9.  JUOOnErtTS  AND  COSTS   INSTITUTEO  OR  RtCOVCaCO 

ACCOUNT  OF  THE     u36   0«    SALE   OF  SLICU  ARTI  CL.E    BV  THIS  CO-APAN  V 

COtviMONWEALTH  EDISON  ^COMPANY 

54    PURCHASING  PRINCIPLES  AND  PRACTICES 


^   REQUISITION  ON  PURCHASINQDEPARTMCNT  NO         HATE 

/)      ALWAYS  Stm  THIS  COPY  OIR  ECT  TO  PURCHASING  DrPARTMELNT 

'              1                                                                                    THIS  SPACE -TO  BE   r.LLEDOvr  Br  CmCMAilMi    OlPT 

ORDFH    FROM                                                                                                                                      „c°*!.lc„ 

VIA 

IPECiai.    tNST 

avJCTiOMS 

rnsT  J                              i 

AD 

CK.Eii 

1 

NECt  tiAR 

^    FOtt 

1 

^Ir.MFn                                                                                                       APPROVED                                                                                                1 

1 

atoa>«.f.c> 

AUTiCLE. 

n°!lt, 

i  O  0»YJ 

VVM£n 

REQUISITION     ON 
PUeCHASlNG,   DEPI 

PREPABtO     Bf 
BUR.EAUOFCOMMeRClAu    ECOrwo^- 
StPTEMSER  H21 

FOR.   USE    OF    PueCHASlN(5  Dl£PTONLV                                                  | 

VENDOR. 

AC30aEES 

UN,T 

p"tCc\ 

DiacojNT 

NrT 
PRitr 

fO«M 

THE  MECHANICS  OF  THE  PROFESSION      55 


^    REQUISITION  ON  PUBCH^SING,  DEPARTMENT  NQ 

"7<        DEPAftTMElNTAL  FILE    COPY 

THE  FOLLOWINCi   AETlCuE  S 

MU.    REQUIRED    FOR  TME   COMPANV                                                                                    ^^^^^ 

DA 

1AT 
ST 

TE          ,3 

eo 

* 

NECESSARY  FOR. 

t,,K,>^r^                                                                                                           APPROVED 

RtOulHEO 

AH-TICI-C 

ON 

30  oirS 

WHtN 

REQUISITION        ON 
PUR.C>^ASIN<^        DEPT 

PREPAIiCO     BY 
BUREAU  OF  COM»^EaciAl.ECONOnicS    INC 
tEPTEMBEH  ie21 

FOR.  USE    OF  DEPAieTMeiNT  OR.DERINQ  MATERIAL 

fORM 

Size  a-t^lo 


56     PURCHASING  PRINCIPLES  AND  PRACTICES 


THE  PURCHASE  ORDER 

The  purchase  order  here  shown  is  written  in  eight  copies.  It  is 
printed  in  fanfold  form,  and  by  means  of  a  special  attachment 
feeds  through  the  typewriter  without  necessitating  the  insertion 
of  carbon  sheets  before  each  order  is  written.  Moreover,  one 
or  more  carbon  sheets  can  be  drawn  out  of  position  at  any  time 
so  that  information  not  desired  on  any  one  of  the  sheets  may  be 
omitted.  With  this  arrangement,  one  typist  can  write  more  than 
two  hundred  purchase  orders  daily. 

The  purchase  order  is  7"  x  8j^"  and  is  designed  to  cut  out  of 
a  regular  sized  sheet  of  paper  with  no  waste.     The  space  for  the 


rD 


I 


PURCHASING 
DtP*BTM£N1 
riLE       COPY 


COMMONWCA.LTW     CotsoN     Company 


Chicago,. 


PACKAGES  MUST  BE  MARKED  WITH  PURCHASE  ORDER  NUMBER 


NOTICE  °~  I'"  5"^' 


PURCHASE     OROCR 


rO 


AftRceS  TO,  a<hD   4HAH.  BE   eouMO  fcx  THE.   Tt  C^S 
PRlMTCO  OM  THE     9AC>^    •HERCOF 

COMMO^'^^E.ALTM   EOtSON   COMPANY 


Size  7"  X  81^" 


vendor's  address  is  arranged  to  fit  the  regular  window  envelope 
of  the  Company,  necessitating  only  one  fold  before  insertion  in 
the  envelope.  Each  sheet  is  numbered  plainly,  facilitating  dis- 
tribution. Before  being  taken  from  the  typewriter,  the  different 
sheets  are  automatically  separated,  the  perforations  at  the  edge 
where  they  are  folded  being  slit  with  knives.  This  reduces  the 
time  necessary  to  distribute  the  purchase  orders.  While  each 
of  the  above  points  seems  minor  in  itself,  yet  in  a  large  company 
the  saving  in  time  and  money  thus  effected  becomes  very  much 
worth  while. 


THE  MECHANICS  OF  THE  PROFESSION      57 

Copy  number  one  is  the  Purchasing  Department  file  copy.  It 
is  filed  in  a  post  binder,  numerically,  and  is  never  removed  for 
any  purpose.  When  an  invoice  is  received  applying  to  it,  the  date 
and  amount  are  entered  in  the  spaces  provided.  If,  however, 
several  invoices  are  to  be  received,  these  are  entered  on  the  back 
of  the  purchase  order  in  the  space  designed  for  this  purpose.  In 
case  this  space  is  not  sufficient,  another  sheet,  ruled  in  the  same 
manner  as  the  back  of  the  purchase  order,  and  of  the  same  size 
as  the  purchase  order  form,  is  placed  in  the  binder  next  to 
the  original  copy,  and  entries  of  further  invoices  are  made  here. 

The  information  in  the  lower  left-hand  corner  is  not  for  the 
vendor,  and  the  carbon  between  copies  one  and  two  is  withdrawn 


—(^       1 ;; — tNOTicEs~?Si<°'«t^S'- 

— V     J  PACKACeS  MU5T  BE  MABKEDWITH  PURCHASE  ORDER  NUMBDi    wvcceOm  ou»ue»tE).  A<tD 


1 


Chica&o,  . 


UJ. 

o 

Q_ 

Z) 
Q 


PURCHASE  ORDER 


purchase:  order 


before  these  spaces  are  filled.  Definite  responsibility  for  each 
purchase  order  is  fixed  by  having  the  person  typing  and  the 
persons  checking  initial  each  order  in  the  spaces  provided. 

Copy  two  goes  to  the  vendor.  It  is  identical,  as  to  printed 
terms  and  conditions,  with  the  original.  Copy  three  goes  to  the 
General  Storekeeper.  The  information  in  the  lower  left  hand 
corner  is  reproduced  here,  and  spaces  are  provided  in  the  right 
hand  corner  for  the  General  Storekeeper's  record. 


58     PURCHASING  PRINCIPLES  AND  PRACTICES 

Copy  four  is  for  the  files  of  the  department  originating  the 
requisition.  Copy  five  is  the  receiving  ticket.  This  copy,  properly 
signed,  accompanies  the  invoice  to  the  auditor,  and  becomes  a 
part  of  the  voucher  file.  The  purchase  order  is  the  same  size  as 
the  voucher,  making  it  possible  to  maintain  an  orderly  appearing 
voucher  file. 

The  sixth  copy  is  used  in  the  Purchasing  Department,  first 
to  compile  a  daily  record  of  the  volume  of  purchases,  second  to 
record  purchases  in  the  purchase  and  cost  record  book,  and 
third,  to  use  as  an  acknowledgment  file.  The  seventh  copy  is  the 
tracer.  Tracing  is  controlled  by  a  semi-automatic  tickler  file. 
All  purchase  orders  outstanding  for  one  week  without  acknowl- 
edgment are  traced  by  means  of  this  copy.  Copy  number  eight 
goes  to  the  traffic  clerk.  Naturally,  however,  there  are  many 
orders  in  which  the  traffic  clerk  is  not  interested,  since  they  may 
not  involve  out  of  town  shipments.  In  this  event,  some  other 
use  is  made  of  most  of  these  copies.  For  example,  the  Sales 
Department  gets  the  eighth  copy  on  all  material  picked  up  from 
local  manufacturers  or  jobbers. 


REVERSE   SIDE   OF  COPY  2   OF  PURCH.i\SE   ORDER    FORM 


<3 


THE  MECHANICS  OF  THE  PROFESSION      59 


THift  COPr   FOR 


r:^  J        [packages  must  be:  marked  with  purchase  order  mumser  ] 


PURCHASE  ORDER 


ftuJ^tj-ZifV       anId      clicKfiiay^' 


I  W.cT 


ho 


PURCHASE   ORDLR 


O    E 


40RC<ilNATJN<i   DEPARTMENT 
FILE    COPY 


o 


RCOUISITIOX 


PURCHASE  ORDCR 


purchase:  order 


ftftceiv«.D  ftt 

' APPROVCO   BV 


-DATE  192. 


60     PURCHASING  PRINCIPLES  AND  PRACTICES 


'=\^  |pAC<A.&ES  MUST  BE  MARKE.0  WITH  PURCHASE  ORDER  NUMBER  | 


PURCHASE  ORDER 


OKt    OR.  BEFORE 

res. 


<) 


PURCHASE    ORDER 

PRCPAaCO       bY 
BUftCAU      09     COnMERCtAL   CCOMOh^lCS 


CHARGE   To_ 


ORDChED  BV_ 


REQUISITION 


KAO   o»  D«  r 


— vj         [PACKAQ^S  MUST  Be  MARKED  WITH  PURCHASE!  ORDER  NUMBER] 


PV/ROlASlNQ  DEPARTMENT 
FILE     COPY 


Chicago.  • 


PURCHASE  ORDER 


ON    OR   BEFORE 

F.oa 


DESCRIPTION 


<^ 


PURCHASE    ORDER 

PREPARED     ©V 
BUREAU     OF  COMMERCIAL   CCONOMICS.iriC 
SEPTEMBER.  1921. 


ACKNO  WLE  D  QEb_ 


OI^ERED  et- 

REQUiSmOM 
♦<OMBE.R       -_ 
FORM     c»o-IZ 


THE  MECHANICS  OF  THE  PROFESSION      61 


1 


COMMQN'WE.ftLTH    EOlSONl  COMPAMY 


THIS        IS 
NOT     AN 
OR.DER. 


o 


CrfNTLEMf-N  rLEAM     were."    TO   TMiS    pyRCHA^e.    ORDtR 

OQ,     OeuivEftV     V/tuL     BE     MAOt  WE    MAvE     RtCEtVeo 

ir    SMlPPCO      ATTACH      ItjVOICE     IN   DvjRk'CflTE     AMO    PEn 


SHIP    TO 
VIA 


b 


m 


o 


h 


r-lCE     WITH     THIS     TttACEtt- 

StaMCO         CMAa^E9    A     MAR.DtNC« 


PURCHASE   OaOER. 


ON    OB.     B&FO>l.£ 


^uamt'Wv   J>^^D    oi4fgir; 


1  »^«r 


PURCHA.se    ORDE.R 

PREPARED      BY 
eURKAU    pF   COMMCRCLAL   CCONQMirSiM 


f3^       PURCHASE      ORDER 
(OJ     TO  TRAFnC  OESK 


62     PURCHASING  PRINCIPLES  AND  PRACTICES 

The  purchase  and  cost  record  sheet  illustrated  is  made  up  from 
the  purchase  order.  This  sheet  is  designed  for  use  in  a  visible 
index  book,  a  feature  which  saves  much  time  in  compiling  the 
record.  This  type  of  index  has  been  found  particularly  adaptable 
to  the  needs  of  the  Purchasing  Department,  and  the  Common- 
wealth Edison  Company  uses  it  for  several  purposes,  such  as  for 
a  file  of  vendor's  addresses,  a  file  of  telephone  numbers,  and  a 
file  of  vendor's  discount  terms. 


PURCHASE  AND  COST  RECORD   SHEET 


Purchase    and    Cost    Record 


^UOTftTlOS  fILE  NC. 


3izo  7'^" "'O'/^" 


FORM  OF 
PURCHASE  AND  COST  RECORD 


Chapter  VII 

MODERN  CATALOGUES  AND  FILES 

Many  Varieties  in  Use. — There  have  been  many  discussions 
concerning  the  value  of  a  modern  catalogue  file,  and  the  best 
way  to  maintain  it.  There  are  nearly  as  many  different  kinds  of 
catalogues  and  of  catalogue  files  as  there  are  individual  pur- 
chasing agents.  Somehow  or  other,  few  purchasing  agents 
realize  that  a  catalogue  file  is  in  reality  only  a  small  library, 
and  that  ordinary  library  filing  methods  may  be  easily  applied. 
The  various  methods  of  filing  frequently  used  are  discussed 
in  this  chapter. 

Vertical  Files. — Many  buyers  who  maintain  rather  a  small 
catalogue  library  have  adopted  the  plan  of  filing  all  catalogues 
and  pamphlets  alphabetically  in  vertical  letter  files.  This 
works  very  well  where  the  file  is  small,  and  the  material  con- 
sists mostly  of  pamphlets,  and  where  the  material  is  not  used 
a  great  deal.  For  the  average  large  file,  however,  more  than 
half  the  catalogues  are  bound  volumes  which  do  not  fit  well  in 
letter  files.  Moreover,  their  greater  bulk  makes  this  method 
of  filing  expensive.  You  would  hardly  expect  to  file  an  ency- 
clopedia in  vertical  letter  files. 

Open  Shelves  Alphabetically  Arranged. — Many  other  buy- 
ers file  all  material  in  open  shelves  alphabetically.  This  works 
well  where  the  library  consists  of  only  a  few  hundred  cata- 
logues, but  is  hardly  feasible  where  the  file  runs  into  several 
thousand  books.  Moreover,  it  is  most  difficult  to  keep  a  neat 
file  of  books  and  pamphlets  together  in  an  open  shelf.  The 
pamphlets  and  flexible  bound  volumes  slip  down  and  get 
pushed  out  of  place,  giving  the  whole  file  an  untidy 
appearance. 

In  Open  Shelves  Numerically  Arranged. — Another  plan 
much  in  vogue  is  to  number  all  catalogues  with  an  automatic 
numbering  machine  as  they  arrive,  and  file  all  the  material 
in  open  shelves.  This  method  requires  a  finding  list,  or  index, 
arranged  alphabetically  by  firms  or  commodities,  or  both. 
This  system  makes  it  possible  to  find  the  catalogues  more 

63 


64    PURCHASING  PRINCIPLES  AND  PRACTICES 

easily,  but  the  pamphlets  stiil  give  trouble  when  filed  with  the 
bound  volumes  on  open  shelves. 

According  to  Size. — You  may  build  up  a  good  looking  and 
very  usable  file  by  arranging  all  catalogues  according  to  size 
in  sectional  bookcases.  In  the  index  to  this  file  each  catalogue 
will  be  giv^en  a  shelf  number  and  a  serial  number.  It  is  easy 
to  pick  out  the  volume  you  want  if  you  know  what  shelf  it 
is  on.  This  file  may  also  be  cross-indexed  by  commodities,  or 
you  may  find  the  names  of  the  firms  carrying  certain  commodi- 
ties by  referring  to  your  commercial  register,  and  then  find  the 
volume  you  want  by  referring  to  the  alphabetical  index. 

A  Combination  Plan. — Perhaps  the  best  all-round  method 
of  filing  catalogues  is  numerically  by  groups.  For  instance, 
all  catalogues  dealing  with  machinery  may  be  given  numbers 
1  to  100;  and  all  pamphlets  dealing  with  machinery,  num- 
bers P-1  to  P-100;  all  catalogues  dealing  with  furniture,  num- 
bers 101  to  200;  and  all  furniture  pamphlets,  P-1 01  to  P-200; 
all  catalogues  of  electrical  goods,  numbers  201  to  300;  and 
all  electrical  pamphlets  P-201  to  P-300,  etc. 

Under  this  plan,  all  pamphlets  would  be  placed  in  a  sepa- 
rate file  or  section.  They  may  be  filed  in  vertical  letter  files, 
or  in  pamphlet  boxes  according  to  number.  When  pamphlet 
boxes  are  used,  all  the  pamphlet  boxes  bearing  catalogues 
relating  to  machinery  might  rest  on  the  open  shelves  next  to 
the  file  of  bound  volumes  describing  machinery.  Ordinary 
metal  shelf  dividers,  such  as  are  used  in  a  library,  may  be 
used,  and  expansion  space  should  be  left  after  each  class  or 
group.  This  plan  presupposes  the  use  of  an  index.  It 
offers  the  additional  advantage  of  showing  at  a  glance  how 
much  material  you  have  on  a  given  class  of  goods,  and  in  what 
condition  the  file  may  be  at  any  time. 

Cross-Indexing  Obviated. — This  plan  of  grouping  all  the 
catalogues  and  reference  books  according  to  the  general  class 
of  materials  listed  not  only  makes  it  possible  to  find  quickly 
the  certain  catalogue  needed  from  time  to  time,  but  it  at  once 
solves  the  vexing  problem  of  cross-indexing  the  contents  of 
your  catalogue  file  by  commodities.  No  cross-index  can  profit- 
ably be  maintained  for  every  item  in  the  numerous  volumes, 
and  most  cross-indexes  sooner  or  later  degenerate  into  a  mere 
listing  of  groups  or  classes,  so  that  the  arrangement  suggested 
serves  as  well  as  most  workable  cross-indexes.  In  addition,  It 
is  always  up  to  date  and  reliable. 


MODERN  CATALOGUES  AND  FILES  65 

Few  of  us  have  made  the  intimate  acquaintance  of  a  cata- 
logue file  that  always  produced  all  the  data  required  when 
needed  but  this  filing  system  will,  I  am  sure,  approximate  re- 
sults as  satisfactory  as  any  other,  and  at  a  minimum  main- 
tenance cost. 

An  aid  to  the  catalogue  file  often  of  infinitely  greater  value 
is  the  list  of  reliable  sources  of  supply  In  the  buyer's  private 
loose-leaf  book,  under  the  headings  of  the  various  commodi- 
ties. Some  buyers  attempt  to  build  up  such  a  list  covering 
every  item  purchased.  This  piles  up  the  cost  for  clerical  work, 
and  the  file  tends  to  become  unwieldy.  Most  of  us  are  con- 
tent to  maintain  lists  for  two  classes  of  purchases  only:  the 
expensive  and  Important  Items  and  those  which  are  rare,  and 
not  covered  adequately  by  the  various  business  directories. 
There  seems  to  he  little  profit  In  attempting  to  duplicate  in 
loose-leaf  or  card-record  forms,  the  data  contained  In  these 
directories. 


Chapter  VIII 
RELATION  TO  OTHER  DEPARTMENTS 

The  Production  Department. — There  have  been  many 
heated  arguments  concerning  the  proper  relation  between  the 
production  department  and  the  purchasing  department.  The 
prodliction  manager  argues  that  since  he  is  responsible  for 
maintaining  production  schedules,  he  should  have  jurisdiction 
and  control  over  the  purchasing  department,  because  the  fail- 
ure of  the  purchasing  department  to  supply  his  needs  hampers 
production. 

The  purchasing  agent  argues  that  he  is  a  capable  executive 
and  that  his  force  is  quite  able  to  keep  the  production  depart- 
ment supplied  with  everything  it  requires  if  the  production 
manager  will  foresee  his  own  needs.  He  argues  that  if  the 
purchasing  department  were  under  the  production  manager, 
the  necessity  for  foresight  on  the  part  of  the  production  man- 
ager would  be  removed.  This  would  result,  he  argues,  in  a 
flood  of  rush  orders,  and  an  expensive  shortsighted  buying 
policy.  If  all  orders  were  to  be  submitted  to  the  production 
manager  for  approval  before  being  placed,  the  work  of  both 
would  be  delayed  and  hampered. 

Another  very  real  argument  against  making  the  purchasing 
department  a  subdivision  of  the  production  department  is  that, 
under  this  regime,  you  probably  would  have  a  lower  grade 
ntan  at  the  head  of  the  purchasing  department. 

If  there  is  any  one  place  where  the  standard  needs  to  be 
raised  rather  than  lowered,  it  is  in  the  purchasing  profession. 
It  is  easier  to  understand  many  commercial  catastrophes,  and 
harder  to  understand  many  commercial  successes  when  you 
consider  the  woeful  lack  of  preparation,  and  the  cramped 
working  conditions  of  the  purchasing  agents  of  many  of  the 
large  concerns. 

Personnel  an  Important  Factor. — In  the  practical  work- 
ing out  of  the  relationship  which  should  exist  between  the 
production  and  the  purchasing  departments,  the  final  adjust- 
ment will  depend  pretty  much  upon  the  type  of  man  you  have 

66 


RELATION  TO  OTHER  DEPARTMENTS         Gl 

at  the  head  of  each  department.  Some  capable  purchasing 
agents  will,  perhaps,  work  better  under  a  very  capable  pro- 
duction man,  but  most  production  men  have  troubles  enough 
of  their  own,  and  have  little  time  and  few  qualifications  for 
the  very  specialized  work  of  the  purchasing  department. 

Relation  to  the  Factory  Superintendent. — The  relation 
which  the  purchasing  agent  and  his  department  will  bear  to 
the  factory  superintendent  will  depend  entirely  upon  the  or- 
ganization and  the  lines  of  authority.  If  the  factory  superin- 
tendent is  practically  the  general  manager  in  active  control  of 
policies,  as  well  as  processes,  there  can  be  little  objection  to 
placing  the  purchasing  department  under  his  control.  If,  how- 
ever, the  policies  of  the  business  are  fixed,  and  actually  con- 
trolled by  another  executive,  then  the  purchasing  agent  should 
report  directly  to  him. 

Relation  to  Credits. — Because  the  work  of  the  credit  man- 
ager and  the  work  of  the  purchasing  agent  are  alike,  in  that 
they  are  both  always  on  the  defensive,  you  might  expect  these 
two  officers  in  any  business  house  to  be  drawn  together  by  a 
fellow  feeling.  Both  have  often  deserved  their  reputations 
as  grouches.  The  value  of  both  these  men  to  their  firms  lies 
in  their  ability  to  say  "no"  at  the  right  time. 

Unfortunately  both  have  too  often  failed  to  develop  that 
rare  ability  to  say  "no"  so  that  the  other  fellow  will  like  it.  It 
was  said  of  the  credit  manager  for  one  of  the  big  Eastern 
jobbers  that  he  could  talk  a  customer  out  of  a  demand  for 
more  credit,  talk  him  into  paying  a  thousand  dollars  on  his 
old  account  and  make  him  like  it.  He  never  overplayed  his 
hand,  however,  and  did  not  refuse  more  credit  when  the 
request  was  justified. 

Assistance  Would  Be  Mutual. — The  friendly  attempt  of 
the  purchasing  agent  to  understand  and  cooperate  with  the 
credit  man  would,  no  doubt,  be  of  great  assistance  to  both. 
Often  the  purchasing  agent  has  at  his  finger-tips  confiden- 
tial information  that  would  be  of  great  value  to  the  credit  man- 
ager, but  there  is  apparently  neither  occasion  nor  opportunity 
for  the  exchange  of  this  information.  Often  the  credit  manager 
has  information  concerning  the  temporary  embarrassment  of 
vendor  firms  which  could  be  of  great  help  to  the  purchasing 
agent  in  negotiating  new  deals.  In  other  words,  if  the 
purchasing  agent  were  in  a  position  to  pay  cash  for  a  car  of 
copper  wire,  and  he  should  learn  through  the  credit  man  that 


68     PURCHASING  PRINCIPLES  AND  PRACTICES 

one  of  the  dealers  was  cramped  for  funds,  he  would  be  in  a 
much  stronger  bargaining  position.  If  he  knew  that  Vendor 
B  was  financially  unable  to  finance  the  fabrication  of  a  large 
order  he  would  place  it  with  another  firm.  If  he  knew  that 
the  buyer  for  another  firm  was  plunging  on  the  commodity 
market,  he  should  warn  the  credit  man  to  watch  that  firm's 
account. 

Cooperation  Valuable  to  a  Firm. — The  continued  inter- 
change of  this  specialized  information  that  both  the  credit 
manager  and  the  purchasing  agent  possess  would  give  their 
firm  an  advantage  that  is  rare.  This  intelligent  cooperation 
would  make  both  of  them  more  valuable  to  their  firm  than  if 
they  were  to  stand  aloof  and  jealously  guard  their  specialized 
information.  Indeed,  neither  purchasing  agent  nor  credit  man 
has  the  right  to  deny  to  the  firm  the  benefit  of  this  informa- 
tion, which  they  have  gathered  while  engaged  upon  their  duties 
for  the  firm. 

Every  purchasing  agent  of  experience  and  every  credit  man- 
ager will  readily  recall  instances  where  they  might  have  been 
saved  much  trouble  and  worry  and  where  the  firm  either  might 
have  profited  or  have  avoided  loss  if  only  they  had  cooper- 
ated. More  and  more  both  these  officers  must  amplify  the 
data  they  have  on  their  card  records  and  the  information  they 
receive  through  the  agencies  by  the  first-hand  information 
gathered  from  the  continued  personal  contact  with  men  who 
direct  the  policies  of  the  firms  with  whom  they  do  business  or 
may  in  the  future  do  business. 

Relation  to  Stores. — There  have  been  many  heated  discus- 
sions concerning  the  proper  relationship  between  the  purchas- 
ing department  and  the  stores  department.  Many  production 
managers  argue  that  because  they  are  responsible  for  produc- 
tion, and  production  depends  upon  a  continuous  supply  of  the 
materials  needed,  the  stores  department  should  be  under  the 
production  manager.  They  also  argue  that  because  they  are 
dealing  with  the  commodities  at  first  hand,  they  are  better 
fitted  to  determine  stores  policies  than  the  purchasing  agent, 
who  is  essentially  an  office  man. 

This  viewpoint  is  not  without  foundation  in  fact  and  there 
are  many  well  managed  plants  where  the  stores  department  is 
under  the  production  manager  or  the  operating  superintendent. 

One  Man  Supremacy. — If,  however,  this  line  of  argument 
be  followed  to  its  logical  conclusion,  you  must  place  the  pur- 


RELATION  TO  OTHER  DEPARTMENTS         69 

chasing  department  under  the  production  department,  because 
the  control  of  the  stores  department  will  not  assure  the  con- 
tinuous flow  of  the  materials  needed,  unless  the  purchasing 
department  provides  them.  Likewise,  as  the  purchasing  and 
stores  departments  cannot  assure  a  continuous  supply  of 
needed  materials  unless  funds  are  provided  to  pay  for  them, 
and  the  materials  will  do  them  no  good  unless  the  workmen 
are  paid  promptly,  and  so  kept  at  their  job,  will  it  not  be  nec- 
essary to  place  the  treasurer  and  the  cashier  under  the  pro- 
duction manager  as  well?  If  the  production  department 
cannot  operate  profitably  unless  the  production  manager  has 
reliable  cost  figures  why  not  give  him  the  cost  department,  and 
the  auditing  department? 

Pursue  This  Argument. — If  you  pursue  this  line  of  reason- 
ing to  its  logical  conclusion,  your  production  man  will  become 
your  general  manager.  To  give  the  problem  a  little  different 
quirk,  why  not  place  the  production  manager  with  his  many 
newly  acquired  departments, — stores,  purchasing,  treasury, 
cashier,  cost,  and  auditing, — under  the  sales  manager?  It  will 
do  no  good  to  build  up  a  sales  force  that  can  land  orders  if 
the  goods  are  not  forthcoming  to  fill  the  orders.  To  place 
the  auditing  department  under  the  production  manager  is  no 
more  absurd  than  to  give  him  control  of  stores.  Yet  you 
know  of  many  well  organized  and  well  managed  plants  where 
that  is  done.  There  are  at  least  two  Chicago  plants  where  the 
production  manager  has  charge  of  both  stores  and  purchasing. 

Responsibility  and  Authority  Inseparable. — The  produc- 
tion department  is  like  an  army  on  the  firing-line,  and  the  pur- 
chasing department  is  the  service  of  supplies.  Can  you  picture 
any  S.  O.  S.  organization  which  could  guarantee  a  continuous 
supply  of  needed  materials  without  a  stores  division  which 
it  could  control?  When  placed  under  the  purchasing  de- 
partment, the  stores  department  provides  the  much  needed 
elasticity  to  the  whole  supply  system.  It  is  always  poor  policy 
to  maintain  an  important  department  with  a  very  small  number 
of  employees,  because  the  incapacity  of  a  single  member  of  the 
force  may  seriously  cripple  the  whole  department.  The  addi- 
tion of  the  stores  department  provides  more  workers  of  a  type 
that  will  materially  help  to  balance  the  work  of  the  depart- 
ment. Much  of  the  value  of  the  purchasing  agent  depends 
upon  his  ability  to  take  immediate  advantage  of  attractive 
offerings.     If  the  stores  department  is  under  the  production 


70     PURCHASING  PRINCIPLES  AND  PRACTICES 

manager,  the  purchasing  agent  may  logically  be  required  to  get 
his  approval  before  any  purchase  can  be  made  for  the  stores 
account. 

Stores  and  Purchasing  Are  a  Logical  Unit. — Under  this 
arrangement,  the  advantageous  purchase  must  often  be  given 
up  because  of  delay.  Moreover,  if  the  stores  function  Is  under 
the  production  department,  the  purchasing  agent,  in  requesting 
requisitions  for  stock  purchases  which  he  regards  as  advan- 
tageous, will  often  be  embarrassed  not  only  by  the  delay  of 
the  requisition  but  by  being  required  to  convince  the  production 
manager  of  the  wisdom  of  the  purchase.  In  the  average  or- 
ganization if  you  place  the  stores  department  under  the  pro- 
duction manager  you  might  as  well  give  him  the  purchasing 
department  also  and  the  next  logical  step  would  be  to  place  the 
department  In  charge  of  a  clerk  because  you  cannot  keep  a 
competent  purchasing  agent  if  you  give  him  no  responsibility. 

With  the  stores  department  under  his  control  the  purchas- 
ing agent  may  protect  the  Interests  of  his  concern  by  laying  In 
reasonable  stores  of  standard  materials.  The  production  man- 
ager in  charge  of  stores.  If  he  is  unfriendly,  may  very  easily 
embarrass  and  hamper  the  purchasing  agent  by  making  elev- 
enth hour  demands  for  materials  which  cannot  be  readily  se- 
cured to  advantage.  While  there  are  many  good  arguments 
on  both  sides  of  this  question,  and  the  best  solution  in  any  or- 
ganization depends  very  largely  upon  the  personnel  involved, 
there  is  no  reasonable  doubt  that,  in  the  main,  it  Is  far  better 
to  place  the  stores  department  under  the  direction  of  the  pur- 
chasing agent. 

Relation  to  Auditing  Department. — The  relation  which 
the  purchasing  agent  and  his  staff  will  have  to  the  accounting 
or  auditing  department  will  again  depend  very  much  upon  the 
personnel.  If  accounting  and  purchasing  departments  are 
headed  by  competent  men  of  broad  experience,  the  line  where 
the  work  of  the  purchasing  agent  leaves  off  and  the  work  of 
the  accounting  department  begins,  will  be  adjusted  by  mutual 
consent.  Generally  speaking,  since  the  heads  of  both  these  de- 
partments are  or  should  be,  experts  in  their  particular  kind  of 
work,  the  less  the  duties  of  the  two  departments  are  permitted 
to  overlap,  the  better. 

Who  Checks  Invoices. — Where  the  accounting  department 
is  well  directed  and  is  In  charge  of  an  executive  of  broad  ex- 
perience and  the  purchasing  department  has  not  yet  struck  its 


RELATION  TO  OTHER  DEPARTMENTS         71 

pace,  it  may  be  desirable  to  have  the  accounting  department 
assume  the  details  of  matching  and  checking  invoices  against 
order  copies.  Where  the  accounting  department  is  under- 
manned and  the  purchasing  department  is  well  organized  and 
well  directed,  it  might  be  well  to  have  the  vouchers  made  out 
in  the  purchasing  department  and  forwarded  to  the  account- 
ing department  for  record.  In  the  average  well-balanced  busi- 
ness house,  however,  neither  of  these  practices  is  desirable. 

Experience  proves  conclusively  that  the  interests  of  all  de- 
partments are  best  served  when  a  clerk  in  the  purchasing  de- 
partment matches  the  invoices  and  order  copies,  records  the 
necessary  invoice  data  on  the  order  copy  and  passes  the  in- 
voices— preferably  accompanied  by  the  office  copy  of  the  pur- 
chase order — to  the  purchasing  agent  or  his  assistant  for 
certification  for  payment. 

The  clerk  who  prepares  the  Invoice  for  certification  will  also 
indicate  on  the  face  of  the  invoice  the  account  to  which  it  is 
to  be  charged.  Generally  speaking,  it  Is  desirable  to  have  the 
invoices  all  charged  to  stores  accounts,  and  have  the  charges 
distributed  in  the  accounting  department  by  means  of  material 
charge  tickets  issued  by  stores.  This  method  may  require 
a  little  more  clerical  work,  but  it  avoids  the  possibility  of  hav- 
ing goods  charged  to  the  operating  accounts  twice,  or  not 
charged  to  them  at  all.  This  confusion  is  always  present  when 
some  invoices  are  handled  one  way  and  some  another. 

Accounts  Payable  Sheets. — All  invoices  should  be  listed 
on  accounts  payable  sheets  (see  p.  109)  before  being  sent  to  the 
accounting  department  for  payment.  One  copy  of  this  list 
should  accompany  the  invoices,  and  the  other  copy  should  be 
retained  by  the  purchasing  agent  as  a  record  of  the  Invoices 
passed  for  payment.  This  plan  will  furnish  the  means  of 
avoiding  the  oft-repeated  wrangle  between  these  two  depart- 
ments as  to  where  certain  invoices  are,  and  who  may  or  may 
not  have  lost  them. 

As  these  invoices  must  all  be  listed  in  the  accounting  de- 
partment on  the  accounts  payable  sheets,  it  is  often  possible 
to  add  enough  distribution  columns  to  the  Invoice  lists  so  that 
these  may  serve  the  double  purpose  of  Invoice  record  for  both 
departments,  and  voucher  record  sheets  for  the  accounting  de- 
partment. A  sample  accounts  payable  sheet  that  has  proved 
of  service  may  be  studied  to  advantage.  (See  Accounts  Pay- 
able Sheet,  page  109.) 


72     PURCHASING  PRINCIPLES  AND  PRACTICES 

Relation  to  Sales. — There  is  a  wide  divergence  of  opinion 
as  to  just  what  relationship  should  exist  between  the  purchasing 
department  and  the  sales  force.  Many  purchasing  agents  of 
broad  experience  contend  that  they  can  best  serve  the  interests 
of  the  firm  only  if  the  sales  department  and  its  activities  are 
entirely  disassociated  from  their  work.  No  doubt  this  opinion 
is  based  upon  sad  experience.  On  the  other  hand,  many  pro- 
gressive buyers  of  today  feel  that  both  departments  benefit 
by  the  friendly  cooperation  of  the  two  departments.  The 
whole  question  hinges  upon  the  use  and  abuse  of  reciprocity. 

Advantages  of  Reciprocity. — Reciprocity  is  an  excellent 
buying  argument,  but  a  poor  selling  argument.  In  brief,  the 
purchasing  agent  who  buys  heavily  from  a  given  concern  which 
could  use  more  or  less  of  the  product  of  his  house  in  turn,  is 
not  serving  the  best  interests  of  all  concerned  if  he  does  not 
bring  this  fact  to  the  attention  of  the  buyer  in  the  other  firm, 
and  also  of  his  own  sales  force. 

Often  the  timely  placing  of  a  small  order  on  his  part  will 
result  in  a  much  larger  order  for  his  house  from  the  firm  with 
whom  he  is  doing  business.  If  the  sales  manager  will  use  the 
information  collected  by  the  purchasing  agent,  while  being 
careful  not  to  embarrass  his  relations  with  other  houses  in  any 
way,  he  can  multiply  his  own  possibilities  for  profit,  and  thus 
increase  his  value  to  his  firm. 

This  type  of  intelligent  cooperation  between  purchase  and 
sales  departments  is  one  more  excellent  illustration  of  the  fact 
that  it  is  vastly  better  to  expend  one's  energies  in  lifting  his 
fellows  out  of  the  mire  than  in  attempting  to  push  them  farther 
under.  That  this  type  of  cooperation  is  becoming  more  and 
more  common  is  another  proof  that  this  old  world  is  getting  a 
little  better  each  year. 

The  Purchasing  Agent  as  a  Director. — The  purchasing 
agent  is  the  business  representative  of  his  company  in  many 
important  transactions.  As  such  he  should  be  a  competent 
business  man  of  broad  experience  in  constant  touch  with  his 
firm's  policies,  and  the  men  who  form  them.  There  are  many 
practical  advantages  in  having  the  head  of  the  purchasing 
department  a  stockholder,  and  a  member  of  the  board  of 
directors. 

The  type  of  man  who  is  today  at  the  head  of  the  purchas- 
ing department  of  large  business  corporations  will  render  the 
same  full  measure  of  service,  whether  or  not  he  receives  a 


RELATION  TO  OTHER  DEPARTMENTS         73 

share  of  the  net  returns  from  the  business,  but  it  is  always 
desirable  to  have  all  departmental  heads  financially  interested 
in  the  business.  In  any  case  there  should  be  no  great  chasm 
between  the  board  of  directors,  who  represent  the  stockholders 
whose  money  is  spent,  and  the  man  who  does  the  spending. 


Chapter   IX 

THE  FUNCTION  OF  SPECIFICATIONS 

A  Fundamental  Element  of  Success. — The  very  founda- 
tion of  the  successful  conduct  of  a  purchasing  department  rests 
upon  right  specifications.  In  the  case  of  a  manufacturing 
plant,  there  should  be  on  file  several  complete  sets  of  detailed 
specifications  for  each  part  or  material  to  be  purchased  or  fab- 
ricated. These  specifications  should  be  accompanied  by  blue 
prints  and  photographs  whenever  necessary. 

The  actual  drafting  of  these  specifications  will  be  in  the 
hands  of  the  engineering  or  planning  departments,  but  they 
should  not  be  formally  adopted  until  they  have  been  carefully 
checked  over  by  the  purchasing  agent.  Many  times  the  pur- 
chasing agent  can  suggest  a  minor  change  which  will  greatly 
reduce  the  cost,  without  in  any  way  lowering  the  quality  of 
the  finished  product.  Indeed,  it  is  often  possible  both  to  re- 
duce the  cost  and  increase  the  service  of  the  finished  product  by 
the  intelligent  substitution  of  materials. 

The  progress  of  every  successful  purchasing  agent  is  marked 
by  many  economies  of  this  sort.  For  instance,  the  substitu- 
tion of  copper-sheathed  steel  cable  for  solid  copper  cable  will 
greatly  lower  the  cost,  while  in  no  way  reducing  the  conduc- 
tivity of  electric  cable.  The  substitution  of  enameled  magnet 
wire  for  silk-covered  magnet  wire  not  only  greatly  reduces 
the  cost,  but  for  certain  types  of  work,  increases  the  insulation. 

The  Drafting  of  Specifications. — It  should  be  the  business 
of  the  purchasing  agent  to  see  that  all  specifications  for  his 
company  are  so  drawn  that  the  number  of  special  items  is 
reduced  to  the  minimum,  and  the  largest  possible  percentage 
of  the  materials  specified  may  be  secured  in  the  local  market. 
The  advantages  of  being  able  to  secure  materials  in  the  local 
market  are  many.  Quite  aside  from  the  convenience,  this 
enables  the  purchasing  agent  to  reduce  his  own  stock  to  the 
minimum.  In  fact  it  is  often  possible  to  make  arrangements 
whereby  the  local  vendors  carry  the  stock.  The  mere  saving 
of  interest  because  of  lessened  investment  in  stock,  added  to 

74 


THE  FUNCTION  OF  SPECIFICATIONS         IS 

the  potential  loss  through  dead  stock,  will  often  amount  to 
nearly  as  much  as  the  net  profit  from  all  other  operations. 
This  is  one  means  of  adding  to  the  net  profit  which  has,  in  the 
past,  been  much  neglected,  but  must  be  cultivated  more  care- 
fully in  the  future. 

In  the  times  that  are  at  hand  the  margin  between  profit  and 
loss  will,  of  necessity,  be  much  narrower  than  it  has  been  in 
the  past.  Many  of  the  business  houses  which  will  survive  the 
next  decade  will  owe  their  very  existence  to  the  careful  watch- 
ing of  such  small  economies. 

Consult  the  Purchasing  Agent. — It  is  just  as  absurd  and 
extravagant  to  draw  specifications  without  consulting  the  pur- 
chasing agent  as  it  would  be  to  plan  a  building  without  laying 
out  the  light  conduits,  or  providing  adequate  cubical  content 
for  the  persons  it  is  designed  to  house.  This  is  one  good  way 
to  smother  and  blind  your  organization. 

While  the  importance  of  buying  by  specification  must  not  be 
under-estimated,  it  is  quite  possible  for  the  purchasing  agent  to 
overreach  himself  in  trying  to  force  his  own  specifications 
upon  the  manufacturer.  The  other  side  of  the  purchasing  of 
materials  by  specification  may  be  briefly  summed  up  as  fol- 
lows: Buying  by  specification  like  any  other  phase  of  regulation 
should  be  administered  with  a  good  deal  of  sane  judgment. 

Buying  by  Specification. — Theoretically,  buying  by  specifi- 
cation is  the  most  scientific  and  accurate  method  of  buying  any 
material.  The  purchaser  desires  a  certain  product  for  a  cer- 
tain purpose,  specifies  exactly  the  kind  and  quality  of  material 
required,  secures  quotations  from  several  sources,  and  places 
the  order  with  the  lowest  bidder.  The  only  thing  left  is  to 
inspect  the  material  delivered,  and  pass  the  invoice  on  to  the 
accounting  department  for  payment.  Theoretically,  this 
method  of  purchase  is  not  only  beautifully  perfect,  but  is  auto- 
matic. You  have  merely  to  feed  the  specifications  in  at  one 
end  of  the  purchasing  department,  and  the  perfect  materials 
are  delivered  at  the  other  end. 

Eliminating  the  Frills. — By  this  method  you  may  also  effect 
many  economies,  theoretically,  at  least.  Your  specifications 
are  drawn  so  as  to  eliminate  every  item  of  expense  that  does 
not  add  to  the  real  service  of  the  product.  You  pay  for  no 
fancy  labels,  fancy  finishes,  or  expensive  containers.  You  elim- 
inate expensive  manufacturing  processes  which  aid  the  gen- 
eral sale  of  a  product,  and  appeal  to  the  general  public,  with- 


76     PURCHASING  PRINCIPLES  AND  PRACTICES 

out  adding  any  real  value  to  the  product.  For  instance,  I 
understand  that  the  stock  from  which  a  well-known  soap  is 
made  is  passed  through  huge  beaters,  under  air  pressure,  in 
order  that  each  particle  of  soap  may  absorb  enough  air  to 
make  it  float  readily  and  always.  This  process  adds  nothing 
to  the  cleansing  value  of  the  soap  but  adds  greatly  to  its 
general  popularity. 

Unfortunately,  however,  buying  by  specification  does  not 
work  out  that  way  always.  The  practical  difficulties  are  many 
and  great  in  normal  times,  and  under  some  conditions,  are 
insuperable  for  the  average  purchaser. 

Technical  Skill  Involved. — To  begin  with,  in  order  to  se- 
cure the  right  specifications,  it  is  necessary  to  have  each  set 
of  specifications  drawn  by  a  technical  expert,  who  is  also  both 
a  practical  mechanic  and  a  lawyer.  These  specifications  must 
be  revised  for  nearly  every  purchase,  in  order  to  keep  them 
up-to-date  and  in  accord  with  the  best  manufacturing  practice, 
and  you  must  have  the  services  of  an  expert  to  test  the  ma- 
terial delivered.  The  real  difficulty  lies  in  the  fact  that  the 
man  who  can  draw  specifications  as  they  should  be  drawn  is  a 
very  rare  person,  and  when  you  do  find  him,  his  cost  is  often 
disproportionate  to  the  size  of  the  purchase. 

Every  manufacturer  is  a  specialist  in  his  line,  and  can  afford 
to  give  you  the  regular  product  of  his  factory  at  a  lower  unit 
cost  than  the  unit  cost  of  an  article  specially  made  for  one 
customer.  If  he  does  make  a  special  product,  you  may  de- 
pend upon  it  that  he  will  tack  on  an  extra  profit  to  reimburse 
him  for  his  trouble.  In  the  long  run,  I  believe  that  the  man 
who  buys  by  specially  drawn  specifications  either  pays  more 
for  the  product  he  secures,  or  else  finds  that  the  specifications 
are  so  drawn  that  there  is  only  one  regular  source  of  supply 
available,  and  so  no  competition  for  the  business. 

I  believe  that  it  is  not  only  cheaper  and  easier,  but  vastly 
more  satisfactory  to  all  concerned,  to  make  practical  tests  of 
a  large  number  of  standard  products  for  a  given  purpose, 
select  the  two  or  three  best  brands  for  your  purpose,  and 
then  buy  the  one  which  happens  to  be  the  cheapest  at  any 
particular  time.  These  findings  must,  of  course,  be  reviewed 
occasionally. 

A  Test  of  White  Paint. — May  I  describe  a  practical  test 
recently  made  on  flat  white  paint?  Twenty  samples  of  dif- 
ferent well-known  brands  were  purchased  in  the  open  market. 


THE  FUNCTION  OF  SPECIFICATIONS         77 

A  half  pint  of  the  contents  of  each  can  was  completely 
broken  up.  Each  half  pint  was  then  numbered  and  weighed 
and  the  number,  weight,  and  brand  were  carefully  recorded. 
We  next  painted  a  given  surface  of  board  with  each  sample, 
using  a  new  brush  for  each  sample.  We  then  numbered  the 
sample  boards  and  recorded  on  the  back  the  ease  or  difficulty 
of  work,  and  the  flowing  quality.  This  data  was  then  covered 
with  a  plain  card,  and  the  boards  were  shuffled  and  left  for 
four  days. 

Next,  the  sample  boards  were  smeared  with  soot,  pencil 
marks,  and  grease,  all  of  which  was  washed  off.  These  sample 
boards  were  then  sorted  out  by  the  process  of  elimination  until 
we  had  the  three  samples  which  covered  the  best,  flowed  the 
best,  were  the  whitest,  and  stood  the  washing  the  best.  The 
label  covers  from  these  boards  were  finally  removed  and  the 
names  of  the  paints  recorded.  We  now  buy  the  one  of  these 
three  which  is  cheapest. 

I  might  add  that  the  representatives  of  these  paint  concerns 
were  first  instructed  that  their  dealings  were  with  the  pur- 
chasing agent  alone,  and  that  any  salesman  who  made  the 
acquaintance  of  the  operating  force  would  be  dropped  from 
the  list.  We  have  followed  the  above  method  of  determining 
the  product  to  be  used  wherever  possible,  and  so  far  it  works. 


Chapter  X 

TESTING  OF  MATERIALS 

The  Importance  of  Tests. — It  matters  little  who  draws 
the  specifications,  or  how  accurately  and  scientifically  they  are 
drawn,  if  the  materials  are  not  kept  up  to  the  standards  set  by 
the  careful  testing  of  materials.  The  importance  of  the  scien- 
tific testing  of  materials,  like  the  scientific  conduct  of  their 
purchase,  is  one  of  the  phases  of  the  work  which  is  apt  to  be 
overlooked;  or  at  best,  underestimated.  The  reason  for  this 
is  largely  due  to  the  fact  that  the  results  are  all  negative. 

The  testing  or  inspection  department  in  the  well  organized 
industrial  plant  will  seldom  produce  any  great  economies. 
The  careful  day-to-day  inspection  and  check  of  all  incoming 
material  acts  as  a  scientific  check  upon  both  the  careless  and 
the  unscrupulous  vendor.  Because  all  small  variations  are 
caught  and  corrected  there  will  be  little  opportunity  to  effect  a 
large  economy,  but  once  permit  the  inspection  department  to 
relax  its  vigilance,  and  the  waste  from  this  source  will  at  once 
begin  to  increase  until  it  may  threaten  the  very  life  of  the 
organization. 

Specific  Cases. — The  following  excellent  example  of  the 
cost  of  faulty  or  careless  inspections  will  illustrate  the  point 
in  mind.  A  Grand  Rapids  furniture  factory  brought  out,  in 
1916,  a  handsome  new  lacquer  finish,  which  was  guaranteed 
to  be  both  permanent  and  waterproof.  The  durability  of  the 
finish  depended  upon  having  the  surface  of  the  wood,  and  all 
the  materials  used,  entirely  free  from  oil. 

A  single  shipment  consisting  of  several  barrels  of  stain  used 
for  undercoating  was  received,  and  put  in  stock  without  being 
inspected.  This  stain  was  all  used,  the  furniture  passed  in- 
spection, and  several  carloads  were  shipped  to  distant  parts  of 
the  country.  The  oil  in  the  stain  began  to  work  out  and  caused 
the  lacquer  to  disintegrate.  The  result  was  that  the  manufac- 
turer, in  order  to  protect  the  reputation  of  his  product,  was 
obliged  to  bring  this  all  back  to  the  factory,  remove  all  the 
defective  finish,  and  refinish  every  piece.     The  cost  of  refinish- 

78 


TESTING  OF  MATERIALS  79 

Ing   added    to    the    cost   of    freight    and    cartage    both    ways 
amounted  to  nearly  as  much  as  the  first  cost  of  the  furniture. 

The  loss  on  this  job  would  have  paid  for  the  maintenance  of 
a  competent  inspection  department  several  years,  and  would 
have  saved  the  manufacturer  much  lost  prestige.  Yet  that 
same  inspection  department,  when  properly  running,  would 
have  great  difficulty  in  proving  economies  which  would  add 
greatly  to  the  net  profits  from  operation.  The  profits  from 
such  departments  are  nearly  always  negative. 

Inspection  to  Be  Effective  Must  Be  Continuous. — The 
testing  and  inspection  of  the  finis'hed  product  is  just  as  impor- 
tant as  the  testing  of  the  raw  materials,  as  the  following  con- 
crete Instance  will  illustrate.  In  1919,  a  public  institution  or- 
dered fifty  sets  of  dormitory  furniture  to  be  made  to  match 
samples  submitted.  The  purchasing  agent  specified  a  certain 
number  of  coats  of  a  high  grade  varnish  for  each  piece.  The 
furniture  was  inspected  at  the  factory,  and  again  upon  de- 
livery, and  was  duly  accepted  and  paid  for. 

After  about  three  months'  service,  however,  many  of  the 
pieces  began  to  turn  white,  and  the  chairs  began  to  drop  apart. 
A  careful  check  back  showed  that  there  had  been  no  adequate 
supervision  in  the  finishing  room,  and  that  while  a  certain 
amount  of  the  varnish  specified  was  used,  it  had  been  used  to- 
gether with  an  inferior  varnish.  Some  pieces  were  right  on 
one  side,  or  one  end,  and  some  were  not  rig'ht  at  all.  The 
manufacturer  was  obliged  to  refinish  the  whole  job  in  order  to 
protect  himself. 

A  careful  check  up  on  the  chairs  that  were  falling  apart 
divulged  the  fact  that  the  dowel  holes  were  cut  deeper  than 
the  length  of  the  dowels,  so  that  the  hot  glue  all  settled  at  the 
bottom,  instead  of  being  forced  up  around  the  dowels  when 
they  were  driven  in.  Because  of  the  lack  of  proper  Inspec- 
tion, the  dowels  were  not  dipped  in  glue  before  they  were 
driven  In,  the  joints  were  almost  without  effectiv^e  glue,  and 
so  the  chair?  began  to  drop  apart.  The  whole  lot  of  chairs 
had  to  be  taken  apart  and  rebuilt.  The  cost  of  correcting 
these  errors  amounted  to  nearly  half  the  original  cost  of  the 
new  furniture. 

Tests  in  Actual  Practice. — Theoretically,  every  shipment 
of  every  item  purchased  for  every  purpose  should  be  tested  by 
the  laboratory  before  the  shipment  is  accepted  and  paid  for. 
In  actual  practice,  however,  this  process  is  far  too  expensive, 


80     PURCHASING  PRINCIPLES  AND  PRACTICES 

and  far  too  slow.  For  instance,  the  Third  Annual  Report  of 
the  Purchasing  Department  of  the  State  of  California,  pub- 
lished November  16,  1920,  page  11,  gives  the  average  cost  per 
test  as  $6.21.  Few  business  organizations  would  feel  t'hat  they 
could  assume  such  an  expense. 

Most  successful  manufacturing  plants  do,  however,  main- 
tain a  laboratory  where  all  important  items  are  tested,  and 
a  few  do  attempt  to  test  every  shipment  of  every  item.  The 
usual  procedure  is  always  to  have  the  important  items  tested, 
and  to  test  the  less  important  items  just  often  enough  to  keep 
the  suppliers  in  line.  Many  small  concerns  who  do  not  pur- 
chase enough  material  to  warrant  the  maintenance  of  a  labora- 
tory depend  upon  reputable  commercial  laboratories  for  this 
service. 

Inspection  Department  Relations. — Just  what  the  relation- 
ship should  be  between  the  testing,  or  inspection  department, 
and  the  purchasing  department,  depends  very  largely  upon  the 
personnel  of  the  organization,  and  the  general  lines  of  author- 
ity. There  is  much  to  be  said  in  favour  of  having  the  inspec- 
tion department  under  the  purchasing  department.  Gener- 
ally speaking,  however,  the  best  interests  of  all  will  be  served 
by  having  the  inspections  department  under  the  production  or 
operating  department.  Since  that  department  is  responsible 
for  the  production,  It  seems  only  fair  to  provide  the  means  for 
checking  the  quality  of  the  raw  material  furnished.  This 
arrangement  will  also  provide  a  means  of  checking  the  work 
of  the  purchasing  department,  and  may  serve  to  keep  both 
departments  on  their  toes. 


Chapter   XI 

STORES  EQUIPMENT  AND  FUNCTIONS 

Items  and  Quantities. — In  a  previous  chapter  we  have  dis- 
cussed at  length  the  relationship  which  should  exist  between 
the  purchasing  department  and  the  stores  division.  There  re- 
main to  be  considered  the  stores  carried,  stores  records,  the 
physical  equipment  of  the  stores  department,  and  the  functions 
of  its  workers.  The  first  stores  problem  is  the  determination 
of  Items  which  should  be  carried  in  stock,  and  the  quantities 
to  be  carried. 

The  Element  of  Distance. — If  you  are  considering  the  stores 
department  of  a  manufacturing  plant,  you  will  plan  to  carry 
in  stock  only  those  Items  of  which  a  continuous  supply  cannot 
be  assured  by  adjacent  plants  at  reasonable  cost.  The  factory 
producing  brass  castings  which  draws  Its  brass  from  the  brass 
mill  next  door,  need  carry  no  stock  of  brass  pigs.  If  the  brass 
mill  Is  located  across  town,  the  storekeeper  should  perhaps 
carry  enough  stock  to  last  two  or  three  days.  If  the  source  of 
supply  is  out  of  town,  the  amount  of  brass  to  be  carried  will 
depend  upon  the  distance  and  the  dependability  of  the  railroad 
service.  If  the  raw  material  Is  drawn  from  an  adjacent  town 
connected  by  a  direct  railroad  line  with  no  switches  interven- 
ing, perhaps  a  three  day  supply  will  be  ample  under  normal 
conditions. 

Piling  Up  Fixed  Charges. — With  the  addition  of  each  In- 
tervening switch,  each  junction,  and  each  different  railroad 
line  between  the  factory  and  the  source  of  supply  of  raw  ma- 
terial, you  must  add  to  the  amount  of  raw  material  to  be  car- 
ried in  stock.  Because  of  this,  it  is  often  more  economical  to 
pay  a  near-by  source  a  somewhat  higher  unit  price  for  the 
same  material  than  you  could  afford  to  pay  a  distant  vendor. 
When  you  insert  the  element  of  distance  between  your  factory 
and  Its  sources  of  supply,  you  are  to  that  extent  piling  up  fixed 
charges  In  the  form  of  delay,  uncertainty.  Interest  charges, 
depreciation  on  stock,  and  handling  charges. 

81 


82     PURCHASING  PRINCIPLES  AND  PRACTICES 

All  things  else  being  equal,  whenever  you  add  another  item 
to  your  stock  list,  whenever  you  add  an  unnecessary  pound  to 
the  quantity  of  any  material  carried  In  stock,  you  thus  add 
something  to  your  total  cost  of  doing  business,  and  to  just  that 
extent  you  put  your  firm  at  a  disadvantage  In  competing  for 
new  business  and  In  holding  old  accounts. 

To  offset  these  losses  Incurred  In  storing  and  handling  ma- 
terials are  the  advantages  of:  (1)  lessened  unit  cost,  because 
of  larger  purchases;  (2)  possible  appreciation  in  value,  be- 
cause of  market  changes;  and  (3)  the  assurance  of  a  con- 
tinued supply  of  raw  material  for  the  operation  of  the  plant. 
As  idle  machines  add  so  greatly  and  so  rapidly  to  the  overhead 
charges,  and  because  idle  machines  mean  dissatisfied  custo- 
mers, the  investment  of  large  sums  in  stocks  of  raw  materials 
must  be  regarded  as  insurance  against  the  greater  losses  from 
partial  shutdowns.  Insurance  is  advisable,  but  the  stores  de- 
partment should  make  sure  that  the  insurance  does  not  cost 
more  than  it  is  worth. 

Importance  of  the  Physical  Equipment. — Now  that  you 
have  determined  the  Items  to  be  carried  in  stock,  and  the 
maximum  and  minimum  amount  of  each  to  be  carried,  suitable 
storehouse  room  must  be  provided.  The  size  and  kind  of 
buildings  and  the  equipment  required  will  vary  greatly.  Gen- 
erally speaking,  it  is  desirable  to  have  the  stores  department 
on  a  single  floor,  and  at  the  point  In  the  plant  which  will  make 
it  possible  for  the  material  to  be  received  and  issued  with  the 
least  possible  waste  effort. 

The  location  of  the  stores  facilities  should  be  determined 
only  after  very  careful  study  of  the  whole  problem,  and  only 
after  all  Interested  persons  have  been  consulted.  In  some 
highly  competitive  businesses  the  total  net  profit  of  certain  in- 
dividual plants  Is  no  greater  than  the  stores  loss  in  other  plants, 
through  careless  planning  and  avoidable  losses.  In  other 
words,  under  highly  competitive  business  conditions,  the  eco- 
nomical operation  of  the  stores  department  may  be  the  deter- 
mining factor  in  the  struggle  for  existence  of  your  plant. 

Shelving  for  the  Stores. — At  least  a  part  of  the  storehouse 
or  storeroom  must  be  provided  with  bins  or  shelving  of  some 
sort.  The  kind  and  arrangement  will  depend  upon  the  mate- 
rial to  be  stored,  with  due  consideration  of  the  desirability  of 
having  the  materials  issued  most  frequently  close  to  the  Issue 
counter,  and  those  which  are  most  valuable,  and  most  likely 


STORES  EQUIPMENT  AND  FUNCTIONS         83 

to  be  stolen,  so  placed  that  they  may  be  adequately  guarded 
with  the  least  possible  waste  of  time  and  motion.  Perhaps 
the  most  desirable  type  of  storeroom  furniture  is  sectional 
steel  shelving  with  adjustable  shelves  and  dividers. 

Vertical  Bins  for  Heavy  Parts. — Where  the  material 
stored  is  heavy  and  bulky,  such  as  bolts,  castings,  and  parts 
for  automobile  plants,  a  unique  method  of  stores  handling 
and  stores  control  is  sometimes  used.  In  a  certain  automobile 
plant  all  material  of  this  kind  is  stored  in  tiers  of  heavy  tote 
boxes,  which  are  piled  one  upon  another  by  cranes. 

These  boxes  are  interchangeable,  but  each  contains  a  cer- 
tain number  of  each  part.  If  each  tote  box  will  hold  forty 
universal  joints,  and  the  tote  boxes  containing  universal  joints 
are  piled  ten  high,  the  storekeeper  knows  he  has  400  universal 
joints  in  stock. 

If  the  minimum  quantity  to  be  carried  is  120,  the  third 
box  from  the  floor  bears  a  red  placard  indicating  the  danger 
point.  This  sort  of  stores  equipment  makes  it  very  easy  to 
inventory,  and  to  keep  track  of  the  stock,  but  would  not  lend 
itself  to  many  types  of  stores  materials. 

Stores  Records. — The  sort  of  stores  records  kept  will  de- 
pend entirely  upon  the  sort  of  business  the  store  serves,  and 
the  personnel.  For  a  manufacturing  plant,  a  perpetual  In- 
ventory of  important  items  used  is  essential.  This  record  may 
be  kept  either  in  the  storeroom,  in  the  purchasing  department, 
or  in  the  accounting  department,  as  conditions  and  personnel 
may  dictate,  and  it  may  be  kept  on  cards,  or  in  a  ledger, 
either  bound  or  loose-leaf. 

Each  method  offers  some  advantages  and  some  disadvant- 
ages. If  your  storeroom  serves  for  maintenance  only,  and 
the  stock  varies  widely  and  may  be  replenished  quickly,  the 
cost  of  maintaining  a  perpetual  inventory  is  not  warranted. 
The  real  test  of  a  perpetual  inventory  system,  as  of  any  sys- 
tem, is,  "does  it  pay  its  way?"  Does  this  or  that  system  pro- 
vide you  with  certain  facts  In  certain  ways  at  certain  times, 
so  as  to  enable  you  to  use  these  facts  In  a  manner  which  will 
result  In  net  savings?  These  net  savings  must,  of  course,  off- 
set the  cost  of  producing  the  data,  and  leave  a  profit  beside. 
If  your  record  costs  will  not  stand  this  test,  they  are  of  doubt- 
ful value. 

A  Guide  to  the  Future. — The  tabulation  of  facts  concern- 
ing transactions  which  have  passed  Is  valuable  only  as  a  guide 


84     PURCHASING  PRINCIPLES  AND  PRACTICES 

to  future  conduct.  The  collection  of  data  which  is  not  used 
is  an  economic  waste,  and  a  needless  burden  upon  your  plant 
or  institution.  If  the  total  cost  of  screws  consumed  per  year 
is  $50,  it  will  not  pay  to  keep  a  perpetual  inv^entory  of  these 
screws,  If  the  total  cost  of  keeping  the  record  of  these  Issues 
Is  $20  per  month. 

If,  however,  the  operation  of  your  plant  depends  upon  an 
adequate  supply  of  those  particular  screws,  and  they  are  dif- 
ficult to  obtain,  a  careful  record  might  be  justified.  Gener- 
ally speaking.  It  will  pay  to  purchase  an  extra  quantity  and 
put  them  In  the  vault  for  safe  keeping,  much  as  you  may  find 
it  desirable  to  keep  a  gallon  can  of  gasoline  under  the  seat  of 
your  car. 

Stores  and  Office  Location. — Where  the  purchasing  agent 
is  responsible  for  the  stores  division,  there  are  many  advant- 
ages in  having  his  office  near  the  storeroom.  This  will  mean 
that  he  will  most  certainly  inspect  the  stores  department  fre- 
quently, and  will  keep  In  closer  touch  with  the  physical  con- 
tents. If  there  Is  close  contact,  it  may  be  necessary  for  him 
to  protect  himself  against  the  Interruption  of  his  duties  by 
members  of  the  stores  force. 

Stock  Keeping. — The  general  scheme  of  keeping  Items  of 
stock  should  be  not  to  make  the  shelves  look  full,  and  have 
every  item  brought  to  the  front  of  the  shelves  and  nicely 
aligned,  but  rather  to  have  each  size  of  every  Item  pushed  to 
the  back  of  the  shelves,  piled  as  high  as  the  shelves  permit, 
and  piled  In  even  tiers.  This  method  has  the  advantage  of 
showing  at  a  glance  just  how  much  of  every  Item  there  is  In 
stock.     The  even  tiers  greatly  facilitate  inventory. 

Stock  Balance. — Most  accounting  systems  provide  for  a 
monthly  balance,  and  permit  the  purchasing  agent  to  know 
how  much  he  has  Invested  in  stores  at  the  end  of  each  month. 
Even  this  data  Is  often  not  available  till  well  on  Into  the  next 
month,  and  Is  not  adequate  for  the  proper  control  of  stores 
investment.  The  operation  of  the  stores  division  Is  In  this 
respect  somewhat  like  the  operation  of  a  hotel.  The  hotel 
man  long  ago  discovered  that  he  must  know  each  morning  the 
net  result  of  the  operations  of  the  day  before.  If  he  did  not 
have  accurate  cost  data  daily,  the  sheriff  would  be  tacking  a 
placard  on  his  front  door  before  many  months. 

As  the  purchasing  agent  knows  the  balance  at  the  end  of 
the  month,  and  all  invoices  go  through  his  office,  and  as  the 


STORES  EQUIPMENT  AND  FUNCTIONS         85 

daily  total  of  materials  Issued  from  the  stores  department  can 
be  readily  obtained,  he  has  at  hand  all  the  data  needed.  Let 
us  assume  that  he  is  not  supposed  to  have  stores  in  excess  of 
$35,000,  and  that  the  balance  on  a  given  date  was  $34,500. 

Daily  Record  Easily  Made. — Have  a  clerk  note  on  a  piece 
of  journal  paper  the  total  of  inv^oices  charged  to  stores  in 
one  column,  the  total  of  material  issued  on  material  slips  in  the 
next  column,  and  in  the  third  and  fourth  columns  the  net  in- 
crease or  decrease  as  the  case  may  be.  The  totals  may  be 
taken  on  an  adding  machine,  and  the  whole  record  completed 
in  less  than  ten  minutes  each  day.  This  is  an  excellent  means 
of  control,  and  an  excellent  example  of  a  bit  of  routine  that 
does  pay  its  way. 

When  the  slump  in  commodity  prices  began  in  the  autumn 
of  1920,  a  surprisingly  large  number  of  purchasing  agents 
had  only  the  scantiest  information  concerning  the  investment 
in  stores  materials.  The  buyer  for  a  metal  specialty  manu- 
facturing concern  in  Chicago  was  asked  for  a  statement  of  the 
value  of  materials  in  stock,  and  estimated  the  amount  at 
$250,000.  The  actual  inventory,  when  taken,  showed 
$185,000.  The  board  of  directors  had  authorized  an  invest- 
ment of  only  $150,000.  The  manager  gave  him  30  days  to 
reduce  his  inventory,  at  a  time  when  everyone  else  was  trying 
to  do  the  same  thing.  He  could  not  unload,  and  his  resigna- 
tion was  requested.  The  buyer  for  a  phonograph  manufac- 
turing company  with  an  authorized  capital  stock  of  $250,000 
was  caught  with  $180,000  tied  up  in  raw  materials,  and  he, 
too,  was  released. 

The  simple  control  method  described  above  would  have 
saved  the  day  for  both  these  men,  and  have  kept  their  firms 
upon  a  dividend  paying  basis,  instead  of  permitting  them  to 
tie  up  most  of  their  resources  in  inventory.  The  really  dis- 
tressing feature  of  these  episodes  was  that  the  executives  lost 
sight  of  the  fact  that  the  purchasing  agents  who  had  been 
capable  enough  to  see  them  through  the  rigors  of  war  and 
reconstruction,  were  valuable  assets,  and  especially  valuable 
because  of  the  added  experiences  they  would  have  acquired 
while  unloading  surplus  stock,  and  getting  upon  a  safe  and 
sane  footing  again. 


Chapter  XII 

PURCHASE  AND  CARE  OF  OFFICE  EQUIPMENT 

Underlying  Principles. — Let  us  now  consider  the  under- 
lying principles  of  the  purchase  of  office  supplies  and  equip- 
ment, and  the  care  of  these  supplies  after  they  have  been 
delivered.  There  is,  I  find,  an  all  too  common  belief  on  the 
part  of  office  managers  and  their  clerical  assistants  that  the 
amount  of  money  involved  in  these  purchases  is  not  large 
enough  to  warrant  any  scientific  basis  of  selection,  or  any 
particular  care  of  the  material,  after  it  has  been  purchased. 
This  is  an  entirely  wrong  conception.  The  difference  be- 
tween right  practice  and  wrong  practice  represents  a  consid- 
erable amount  of  money  in  a  year,  and  the  percentage  of 
saving  possible  is  often  startling. 

Pencils,  etc. — Let  us  first  examine  in  detail  the  various 
small  items  which  will  be  purchased  for  the  average  o-ffice — 
pencils,  pens,  ink,  carbon  paper,  pins,  and  clips.  The  total 
annual  cost  of  pencils  for  any  office  is  not  huge,  but  it  is  highly 
desirable  to  select  pencils  that  are  suited  to  the  requirements 
of  the  work,  and  then  carefully  to  supervise  the  distribution. 
Pencils  may  be  roughly  divided  into  three  classes :  wooden 
lead  pencils,  paper  pencils,  and  refillable  pencils. 

For  general  all  around  work  the  old  style  wooden  pencil  is 
best  adapted.  It  should  be  furnished  in  two  or  three  grades 
of  hardness,  and  should  be  six  or  eight  sided,  so  it  will  not 
roll  off  the  desks.  A  pencil  is  usually  used  in  making  non- 
permanent  records;  therefore,-  it  should  be  equipped  with  a 
fair  quality  eraser.  The  general  objection  to  a  paper  pencil 
is  its  liability  to  break  before  it  is  used  up,  as  many  nervous 
office  employees  unconsciously  put  a  good  deal  of  pressure  on 
their  pencils. 

Advantages  Against  Costs. — The  third  class  of  pencil  is 
the  refillable  type,  of  which  there  are  many  kinds  on  the  mar- 
ket. This  type  of  pencil  has  the  one  great  advantage  of 
being  always  sharp,  but  it  possesses  three  drawbacks:  the 
cost  is  so  high  that  issuance  to  the  general  office  force  re- 

86 


OFFICE  EQUIPMENT  87 

quires  a  considerable  investment,  and  the  general  desirability 
of  such  a  pencil  for  personal  use  makes  its  liability  to  disap- 
pearance high.  Perhaps  the  greatest  drawback  to  all  such 
pencils  lies  in  their  excessive  weight.  Heavy  pencils  cause  con- 
siderable fatigue  after  an  hour's  continuous  use. 

If  there  are  in  any  special  office  conditions  which  make  the 
use  of  refillable  pencils,  fountain  pens,  or  other  similar  equip- 
ment desirable,  the  point  may  often  be  covered  by  offering  to 
furnish  these  items  for  the  clerical  force  at  wholesale  cost. 
Indeed,  it  may  be  found  profitable  to  sell  such  equipment  to 
the  force  for  less  than  wholesale  cost.  This  makes  it  easy  for 
the  office  force  to  own  these  adjuncts  to  their  work,  and  re- 
lieves the  firm  of  initial  Investment,  and  the  burden  of  caring 
for  this  petty  equipment. 

Pens  and  Inks. — The  cost  of  pens  is  usually  a  small  item 
unless  fountain  pens  are  used,  in  which  case  they  may  be  sup- 
plied to  the  force  at  cost.  It  is  not  desirable  to  permit  the 
use  of  fountain  pens  on  valuable  permanent  records,  such  as 
ledgers  and  cash  books,  however,  because  of  their  liability  to 
drop  ink  at  inopportune  moments.  For  certain  types  of  work, 
the  fountain  pen  is  advantageous. 

Ink  is  ordinarily  purchased  in  quart  bottles  for  office  use, 
and  where  the  point  of  ultimate  consumption  is  near  the  point 
of  manufacture,  and  the  cost  is  reasonable,  this  is  the  most 
satisfactory  form  In  which  to  purchase  It.  If,  however,  you 
are  located  in  the  country,  or  if  the  price  is  high,  or  breakage 
in  trarLsit  is  a  considerable  item,  it  Is  often  best  to  purchase 
Ink  in  either  tablet  or  powder  form,  and  have  the  office  boy 
mix  it. 

This  kind  of  ink  Is  usually  cheaper,  can  be  more  easily 
handled  and  stored,  and  Is  as  good  as  the  ready  mixed  ink. 
It  has  two  distinct  disadvantages — it  is  easily  carried  away 
by  the  office  force,  and  the  boy  who  mixes  the  Ink  must  be 
closely  watched,  or  he  will  make  the  ink  so  thick  it  will  not 
flow,  and  will  run  the  cost  up  to  an  unreasonable  amount. 

Carbon  Papers. — The  selection  of  a  right  carbon  paper 
at  a  right  price  requires  a  great  deal  of  tact,  skill,  and  dip- 
lomacy. If  you  have  a  force  of  twenty  stenographers,  the 
probabilities  are  that  they  will  have  at  least  ten  distinct 
preferences  for  different  kinds  of  carbon  paper.  You  may 
then  pursue  either  one  of  two  definite  pol'cies — you  may  give 
each  one  the  kind  of  carbon  paper  she  wants,  and  pay  three 


88     PURCHASING  PRINCIPLES  AND  PRACTICES 

or  four  prices  for  it,  or  you  may  make  an  intelligent  selection 
of  the  best  available  carbon  paper,  and  supply  it  to  all  the 
force. 

If  you  decide  to  use  one  carbon  paper,  do  not  use  it  a 
few  weeks,  and  then  try  something  else.  Once  you  begin  to 
drift  about,  you  become  legitimate  prey  for  every  carbon 
paper  salesman,  and  you  will  spend  more  time  talking  to 
these  salesmen  than  the  whole  purchase  is  worth.  Select  a 
good  carbon  paper  for  both  pencil  and  typewriter,  and  then 
stay  with  that  brand. 

Buy  Six  Months'  Supplies.- — Permit  me  here  to  warn  you 
against  the  purchase  of  carbon  paper  coupons.  Statistics 
show  that  the  average  supply  house  can  sell  coupons  for  the 
carbon  paper  on  a  cost  basis,  and  still  make  money,  because 
of  the  large  percentage  of  coupons  that  are  never  redeemed 
for  some  reason  or  another.  Purchase  a  six  months'  supply 
of  carbon  paper  twice  a  year,  and  refuse  co  discuss  carbon 
papers  with  any  salesman.  A  similar  policy  should  be  used 
in  the  selection  of  typewriter  ribbons. 

Checking  Upon  Waste. — Now  that  you  have  purchased 
these  small  supplies  let  us  consider  their  issue  and  care.  In 
the  average  office  everyone  gets  all  the  supplies  he  asks  for, 
but  this  is  apt  to  be  wasteful.  In  taking  over  the  manage- 
ment of  a  new  office,  have  all  supplies  inventoried  and  placed 
in  a  locked  cupboard.  For  the  first  month,  let  the  supply 
clerk  issue  all  the  supplies  requested,  and  have  him  keep 
a  record  of  the  consumption.  These  issues  for  the  first 
month  should  be  checked  over  and  quotas  for  every  month 
fixed.  Thereafter  issues  should  be  made  only  the  first  of 
each  month,  or  semi-monthly.  With  occasional  revision  and 
adjustment  you  can  easily  control  this  one  rather  large  ex- 
pense item.  Pins,  clips,  stenographic  notebooks,  scratch  pads, 
and  other  small  supplies,  may'  be  issued  on  the  same  basis. 

Desks  for  Real  Work. — Let  us  next  consider  office  equip- 
ment, and  then  turn  to  the  most  important  item  of  all — the 
printed  form.  I  believe  it  is  just  as  important  to  see  that  the 
clerks  and  stenographers  have  suitable  chairs,  desks,  type- 
writers, and  other  similar  equipment,  as  it  is  to  see  that  your 
carpenters  have  suitable  tools.  Without  proper  equipment 
much  of  the  energy  is  wasted  in  either  case. 

Experience  shows  that  the  best  working  desk  is  flat  topped, 
because  this  type  leaves  little  room  for  the  accumulation  of 


OFFICE  EQUIPMENT  89 

papers  and  data  that  belong  in  the  files.  For  the  same  rea- 
son the  most  useful  typewriter  desk  is  the  type  with  the  ma- 
chine in  the  pedestal.  This  desk  has  three  great  advantages:  It 
enables  the  stenographer  to  use  the  typwriter  without  moving 
all  the  papers  on  it;  places  all  papers  conveniently  near  at 
hand;  and  still  farther  cuts  down  storage  space. 

Chairs  and  Typewriters. — It  is  important  that  the  chairs 
used  by  the  office  force  be  light,  easily  movable,  adjustable  in 
height  and  comfortable.  Experience  shows  that  a  chair  built 
with  a  perforated  leather  seat  over  cane  is  both  serviceable 
and  comfortable. 

There  Is  a  rather  wide  range  possible  in  the  selection  of  a 
typewriter.  There  are  many  arguments  in  favor  of  the  adop- 
tion of  each  one  of  the  several  standard  models.  You  cannot 
go  very  far  wrong,  no  matter  which  you  select. 

Methods  of  Buying  Printing. — There  are  several  different 
methods  of  buying  printed  forms  In  vogue  today.  Some 
firms  select  a  trustworthy  printer,  and  give  him  all  their 
business.  This  method  results  in  the  prompt  delivery  of  jobs, 
and  in  general  satisfaction,  if  the  purchaser  regards  stationery 
as  a  necessary  evil,  and  a  matter  of  too  small  Importance  to 
warrant  serious  consideration.  In  this  class  you  usually  find 
the  moderate  sized  firm  that  Is  not  very  aggressive.  Some 
firms  follow  the  same  system,  but  secure  competition  on  an 
occasional  job,  In  order  to  satisfy  themselves  that  they  are 
not  being  overcharged.  When  the  printer  Is  suddenly  asked 
for  a  bid  on  a  job  for  a  firm  that  has  been  placing  all  its 
business  without  bids,  he  submits  a  price  at  cost,  or  under, 
gets  the  job,  and  then  tacks  a  little  extra  profit  on  the  next 
few  jobs. 

Some  business  concerns  feel  that  the  only  solution  of  the 
printing  problem  lies  in  the  operation  of  their  own  plants. 
The  usual  result  Is  that  their  printing  costs  much  more  than 
when  the  other  fellow  did  It. 

Why  the  Cost  Runs  Up. — The  printing  plant  operated 
by  the  average  Industrial  concern  runs  up  the  cost  of  jobs 
because  it  Is  usually  equipped  to  take  care  of  the  maximum 
requirements  of  the  plant,  and  carries  a  heavy  burden  of  un- 
productive time.  This,  added  to  the  lack  of  the  necessity 
for  making  a  profit,  and  the  temptation  to  squander  time 
in  experiments,   greatly  increases  the  net  cost. 

One   large   firm   of   packers  has   solved   this   difficulty  by 


90     PURCHASING  PRINCIPLES  AND  PRACTICES 

installing  a  printing  plant  capable  of  turning  out  only  60 
percent,  of  their  estimated  requirements.  All  jobs  are 
figured  by  the  printing  foreman  in  competition  with  outside 
printers,  with  the  result  that  the  house  plant  does  only  the 
work  that  it  can  do  most  cheaply,  and  it  always  has  a  full 
schedule.  Viewing  this  arrangement  solely  from  the  stand- 
point of  the  cheap  production  of  a  given  job,  it  is  highly 
satisfactory. 

Some  large  consumers  of  printing  let  all  printing  jobs  on 
open  competition,  with  the  result  that  the  printer  who  forgets 
some  item  of  cost  in  figuring  the  job  gets  the  order  and  loses 
money.  This  results  in  a  most  unhealthful  condition,  and 
offers  a  premium  for  skimped  work. 

The  Modern  Method  of  Purchase. — The  modern  method 
of  placing  printing  contracts  is  very  different  from  all  of 
these.  The  letting  of  contracts  for  printing  under  this  plan 
is  no  haphazard  makeshift,  but  the  result  of  careful  analysis 
of  the  needs  and  uses  to  which  a  given  piece  of  printing  is 
to  be  put.  Every  printed  form  is  studied  with  seven  things 
in  mind: 

1.  Is  this  form  necessary? 

2.  Can  it  be  combined  with  other  forms? 

3.  Is  the  size  standard,  3  x  5,  4  x  6,  etc? 

4.  If  it  is  printed  on  two  sides,  is  this  necessary? 

5.  Would  a  rearrangement  of  copy  serve  the  same  pur- 
pose,  and  reduce  the  cost  of  setting? 

6.  Is  the  stock  suited  to  the  purpose  for  which  the  form 
is  used? 

7.  If  on  coloured  stock,  is  this  necessary? 

A  careful  study  of  one  hundred  forms  used  by  the  average 
business  house  will  usually  show  that  some  records  which 
need  to  be  preserved  for  years  are  printed  on  stock  con- 
taining ground  wood,  while  others,  which  are  preserved  only 
a  few  days,  are  printed  on  linen  ledger  stock.  You  will 
find  every  size,  weight,  and  colour  of  stock  imaginable,  vary- 
ing in  weight  from  thirteen  to  twenty-four  pounds. 

Forms,  Standards  and  Weights. — The  first  step  in  the 
purchase  of  stationery,  under  the  modern  method,  is  to  elimi- 
nate all  unnecessary  forms,  and  reduce  the  number  by  com- 
bining several  forms.  The  next  step  is  to  reduce  all  forms 
to  standard  sizes  and  weights.  This  will  enable  you  to 
print  all  the  forms  needed  on  six  different  kinds  of  stock,  in 


OFFICE  EQUIPMENT  91 

not  more  than  seven  colours,  and  perhaps  four  weights.  Most 
of  the  forms  can  be  run  upon  a  16-lb.  all  sulphide  stock  in 
white.  As  soon  as  you  have  determined  the  number  of 
forms  which  can  be  run  upon  the  16-lb.  all  sulphide,  the  layout 
must  be  made  up.  Under  present  market  conditions,  the 
largest  size  stock  sheet  available  in  16-lb.  sulphide  is  the 
double  folio,  size  34  x  44,  which  will  cut  eight  full  sized 
letterheads  or  the  equivalent. 

Suppose  for  instance,  that  you  need  5,000  each  of  four 
forms,  size  85^  x  11,  and  10,000  forms,  size  11  x  17.  You 
simply  make  two  plates  for  the  11  x  17,  and  one  plate  for 
each  of  the  other  two  forms,  and  run  5,000  impressions, 
then  cut  and  pad.  The  same  principle  may  be  worked  out 
with  any  number  of  small  forms  of  different  sizes,  as  long 
as  the  forms  do  not  cut  to  waste,  and  all  cut  along  straight 
lines. 

Standardization  Saves  Money. — By  standardizing  the  size, 
weight  and  colour  of  your  forms,  you  make  a  huge  saving. 
By  running  these  forms  in  large  sheets  on  a  cylinder  press, 
you  make  another  large  saving.  A  still  farther  saving  may 
be  made  by  designing  your  forms  so  that  they  may  be  pro- 
duced with  the  least  possible  amount  of  composition.  The 
charge  for  press  work  on  two-colour  forms  is,  of  course,  more 
than  double  the  cost  on  single-colour  forms.  A  form  with 
a  single  ruled  line  costs  nearly  as  much  as  a  form  with  a 
dozen  ruled  lines.  A  form  with  uniform  sized  type  is  cheaper 
and  easier  to  make  up  than  a  form  set  in  several  different 
sizes  of  type.  In  a  word,  the  savings  resulting  from  in- 
telligently planning  the  purchase  of  all  your  stationery  at 
one  time,  instead  of  just  ordering  a  new  supply  of  the  in- 
dividual items  when  your  stock  gets  low,  will  amount  to  from 
25  per  cent,  to  60  per  cent. 

Cutting  Down  on  Forms. — The  specifications  of  the 
printed  forms  used  by  the  City  of  New  York  occupy  a  volume 
about  the  size  of  a  telephone  directory.  A  printer  who 
received  the  contract  one  year,  employed  three  estimators 
three  weeks  to  figure  the  job.  He  then  took  the  estimate 
which  was  highest,  and  added  25  per  cent,  as  a  safety  margin. 
He  was  awarded  the  job,  but  lost  money  on  his  contract.  The 
specifications  for  printing  the  same  number  of  forms  under 
the  present  plan  would  occupy  considerably  less  than  fifty 
pages,  and  could  be  safely  figured  by  any  printer  in  half  a  day. 


92     PURCHASING  PRINCIPLES  AND  PRACTICES 

By  way  of  Illustration,  I  submit  the  following  brief  report 
upon  the  printed  forms  used  by  a  large  educational  institu- 
tion in  the  East: 

A  STUDY  OF  THE  PRINTED  FORMS 

December  19,   1918. 
I  have  made  a  careful  study  of  the  printed  forms  in  use  by  ten  departments, 
and   report  as  follows: 

Total   number   of   separate   forms   used   per   annum 252 

Number  of  these   forms  printed  on  odd   size   stock    (i.e.  stock 

that    cuts    to    waste ) Ill 

Number    of    standard    size    forms 141 

Total    number   of   separate    forms   used    per    annum 800,680 

Estimated    total    cost    per    year — (10    departments) $1,454.23 

Number    of    forms    plated 32 

Number   of   forms   printed   on   both   sides 46 

Number    of    different    kinds    of    stock    used    was    as    follows: 

9,  11,  14,  21,  8,  8,  10,  8,  31,  1 Average 12 

An  examination  of  the  forms  indicates  that  the  large  number  of  odd  sizes, 
and  the  wide  variety  of  stock  used  are  not  the  result  of  careful  selection, 
but  rather  the  natural  result  of  the  rapid  expansion  of  the  various  departments. 
The  following  recommendations,  if  adopted,  would  result  in  a  saving  of  at 
least  20  percent,  in  the  first  cost  of  these  printed  forms,  and  would  in  many 
cases  effect  farther  economies,  because  of  standard  forms  and  standard  practice. 

RECOMMENDA  TIONS : 

1.  That  each  department  be  requested  to  draw  requisitions  for  a  year's 
supply  of  printed  forms;  these  requisitions  to  be  drawn  July  1st, 
and  the  finished  job  to  be  delivered  in  September.  This  will  enable 
the  press  to  do  this  work  during  the  dull  Summer  months. 

2.  That  as  far  as  possible  the  stock  be   limited   to: 

A — 16  lb.  all  sulphide  sheet for  ordinary  forms. 

B — 20  lb.  bond for  forms  to  be  preserved  for  files. 

C — Linen   Ledger for   official   records. 

D — Cheap  Bristol for  placards. 

E — Medium  Bristol for  temporary  card  forms. 

F — Good  grade  Bristol for  permanent  records. 

3.  That  each  form   bear   a   small   stock   number   in   the   lower   left  hand 
corner,  so  that  it  may  be  easily  duplicated. 

4.  That  standard  forms  be  plated. 

The  present  method  of  handling  each  small  job  of  printing  as  a  separate 
unit  of  work  is  convenient,  but  expensive.  If  the  bulk  of  the  orders  for 
printing  were  placed  at  one  time,  many  of  the  forms  could  be  run  together 
on  a  single  sheet,  thus  reducing  the  press  work  to  a  fraction  of  the  present 
cost.  Similar  standardization  by  large  commercial  houses  has  effected  savings 
varying  from  25  percent,  to  65  percent.  I  believe  that  we  can  save  at  least 
20  percent. 

Neglect  of  Printed  Forms. — One  reason  why  so  little 
thought  and  attention  have  been  devoted  to  the  study  of  the 
scientific  purchase  of  printed  forms  is  that  most  business  men 
consider  them  a  very  unimportant  item   of  expense.      Most 


OFFICE  EQUIPMENT  93 

jobs  are  small,  and  they  do  not  take  the  time  to  foot  up  the 
total  amount  expended.  If  purchasing  agents  would  get  into 
the  habit  of  occasionally  totaling  the  annual  purchases  of 
stationery,  and  other  seemingly  small  items,  they  would  often 
be  astounded  at  the  total  amount  of  money  involved.  This 
sort  of  purchase  has  habitually  been  so  neglected  that  it  is 
easy  to  show  percentages  of  saving  that  will  amaze  you. 

Much  of  the  scientific  purchase  of  stationery  today  is  due 
primarily  to  the  published  results  of  the  studies  of  Russell  A. 
Pettengill,  of  Chicago.  The  results  achieved  by  him  are  most 
interesting  and  are  contained  in  a  series  of  articles  in  the 
''Purchasing  Agent"  beginning  December,  1918. 


Chapter  XIII 

BUDGET  CONTROL  OF  PURCHASES  BY 
DETAILED  ESTIMATES 

Advantages  Great  and  Obvious. — Just  as  there  does  not 
seem  to  be  any  sound  argument  against  the  establishment 
of  a  centralized  purchasing  department,  no  matter  what  the 
size  of  the  business,  just  so  there  does  not  seem  to  be  any 
sound  argument  against  the  establishment  of  the  budget  or 
estimate  system  of  control  in  any  business.  It  is  true  that  this 
method  of  controlling  expenditures  cannot  be  made  to  fit  every 
business  without  individual  variations  in  the  system,  to  fit  indi- 
vidual cases  and  particular  problems.  The  advantages  are  so 
great  and  so  obvious,  and  the  objections  are  so  groundless, 
however,  that  the  reluctance  of  American  business  firms  to 
adopt  this  method  of  control  is  hard  to  understand. 

Spending  money  without  regard  to  a  definite  plan  of  con- 
trol, is  like  sailing  without  a  chart.  The  business  may 
make  port  safely,  repeatedly,  but  sooner  or  later  business 
currents  will  change,  and  the  man  without  a  chart  will  be  in 
danger  of  shipwreck.  Budgets  may  be  made  up  for  a  year, 
for  a  quarter,  for  a  month,  or  for  a  week;  depending  upon 
the  conditions  and  the  circumstances  of  the  business.  For 
most  business  concerns  the  best  plan  would  be  to  make  a 
quarterly  budget,  and  then  revise  it  monthly.  In  times  of 
stress  the  budget  should  be  reviewed  and  revised  weekly. 

Estimate  Income  First. — In  making  the  budget  the  first 
step  is  to  make  a  conservative  estimate  of  the  income  for  the 
budget  period.  The  income  data  should  be  complete,  and 
should  show  not  only  the  gross  amount  of  estimated  income, 
but  the  sources  from  which  it  is  expected,  and  the  periods 
during  which  it  is  expected  to  be  realized.  This  should  be 
set  up  to  show  the  income  for  this  period,  and  the  correspond- 
ing period  for  the  last  several  years. 

The  next  step  is  to  budget  the  expenditures  for  the  same 
period.  The  head  of  each  department  should  be  required  to 
submit  an  estimate  of  the  expenditures  he  expects  to  make 

94 


BUDGET  CONTROL  95 

during  that  period.  These  estimates  should  not  be  made  In 
lump  sums,  but  should  show  the  details,  so  that  the  auditor 
may  draw  up  a  statement  to  the  best  advantage. 

The  office  manager  will  be  required  to  show  the  number 
of  employees  In  his  department,  together  with  their  salaries 
for  the  period.  He  will  be  expected  to  show  the  amount  he 
expects  to  spend  for  supplies,  for  vacation  help,  for  new 
equipment,  and  for  all  other  purposes  in  detail. 

With  this  data  In  hand  from  all  the  departments,  the 
auditor  will  then  draw  up  a  complete  statement  of  the  esti- 
mated expenditures  for  each  department.  This  will  at  once 
show  the  manager  of  the  company  whether  he  is  going  to  have 
enough  funds  to  meet  all  obligations,  or  whether  he  must 
borrow. 

If  he  finds  he  must  borrow  from  the  banks,  the  problem 
at  once  resolves  itself  into  the  question:  "Is  it  better  to 
borrow,  or  to  curtail  operations  or  expenses,  or  will  It  be 
better  to  do  some  of  both." 

Margins  of  Safety. — Let  us  assume  the  auditor  estimates 
that  the  income  from'  all  sources  for  the  next  three  months  will 
be  $2,000,000  of  which  sum  the  sales  manager  estimates  that 
sales  will  be  $1,500,000.  .If  the  cost  of  the  raw  materials  in 
their  particular  product  is  about  one-third  of  the  selling  price, 
then  it  is  safe  for  the  board  of  directors,  or  the  general  man- 
ager, acting  for  them,  to  authorize  the  purchase  of  $500,000 
worth  of  materials  during  the  next  quarter,  assuming  that  the 
present  Inventory  will  not  change  materially. 

Let  us  assume,  however,  that  the  sales  manager  has  over- 
estimated sales,  and  at  the  end  of  the  first  month  in  that 
quarter  he  has  sold,  not  $500,000  (one  third  of  $1,500,000) 
worth  of  goods,  but  only  $300,000  worth. 

The  board  of  control,  or  the  general  manager,  will  at 
once  instruct  the  purchasing  agent  to  cut  down  his  purchases 
accordingly. 

If  Busmess  Increases. — Let  us  assume,  on  the  other 
hand,  that  there  Is  a  great  increase  in  the  volume  of  business, 
and  that  the  factory  is  getting  behind  in  Its  orders.  It  will 
then  be  up  to  the  general  manager  to  decide  whether  he  will 
let  the  orders  pile  up,  whether  he  will  put  on  more  workers, 
or  whether  he-  will  first  put  it  up  to  the  production  manager, 
to  devise  methods  of  increasing  the  output  without  increasing 
the  M^orking  force. 


96     PURCHASING  PRINCIPLES  AND  PRACTICES 

Eliminating  Guesswork. — In  a  word,  buying  by  budget,  or 
running  a  business  on  the  budget  method,  is  nothing  more 
nor  less  than  the  careful  tabulation  in  detail  of  the  things 
that  have  been  accomplished  in  the  past,  together  with  the 
amount  that  these  accomplishments  have  cost,  side  by  side 
with  a  conservative  estimate  of  the  things  you  expect  to 
accomplish  in  the  immediate  future,  together  with  a  careful 
estimate  of  the  amount  of  money  you  expect  each  item  to 
cost. 

With  that  sort  of  a  chart  before  him,  the  modern  manager 
can  compare  his  actual  progress  with  his  expected  progress, 
and  his  costs  with  his  anticipated  costs,  as  he  goes  along. 
This  will  enable  him  to  correct  dangerous  tendencies  before 
they  get  beyond  control. 

Budget  System  Not  Inflexible. — Some  individuals  who 
have  never  had  any  experience  running  a  business  according 
to  a  budget,  believe  that  a  budget  system  is  necessarily  in- 
flexible, and  cannot  accommodate  Itself  to  rapidly  changing 
conditions.  It  is  true  that  the  more  rapidly  conditions  change, 
the  shorter  should  be  the  budget  period,  and  the  more  fre- 
quently should  the  various  Items  be  reviewed. 

But  the  manager  who  goes  it  blind  without  reference  to  a 
definite  program  of  income  and  expenditures  will,  sooner  or 
later,  get  into  deep  water.  If  no  definite  program  has  been 
mapped  out,  and  expenses  must  be  cut  suddenly,  the  whole 
organization  Is  apt  to  be  thrown  out  of  adjustment.  The 
purchasing  agent  who  serves  a  business  firm  that  does  not 
budget  its  Income  and  Its  expenditures,  Is  apt  to  find  himself 
looking  for  a  new  connection,  just  when  new  connections  are 
hardest  to  find. 

Avoidable  Overbuying. — Two  very  good  examples  of 
what  may  happen  to  a  business  run  without  a  definite  program 
have  just  come  to  my  attention.  During  the  war  many  of 
the  smaller  business  concerns  grew  very  rapidly  and  a  good 
many  purchasing  agents  were  taken  on  who  had  rather  limited 
preparation  for  that  sort  of  work.  The  buyer  for  a  metal 
goods  concern  was  a  very  clever  chap,  with  limited  experience. 
The  new  business  boom  kept  him  so  busy  that  he  had  no  op- 
portunity to  work  out  a  definite  purchase  policy.  His  firm 
had  nothing  which  even  approached  a  budget.  There  was  no 
sales  quota  and  no  limit  on  raw  materials  stocks — In  other 
words,  practically  no  check  on  expenditures. 


BUDGET  CONTROL  97 

The  purchasing  agent  was  expected  always  to  have  on  hand 
the  material  needed,  and  was  blamed  only  if  he  failed  in 
that.  New  business  was  coming  in  so  fast  that  there  was 
no   thought   of   the   constantly    increasing   inventory   balance. 

Business  tightened  up,  almost  over  night,  and  the  board  of 
directors  called  upon  the  general  manager  for  a  statement 
of  affairs.  After  working  and  sweating  for  weeks,  he  found 
that  there  was  nearly  half  a  million  dollars  in  raw  materials, 
and  that  the  investment  was  not  only  more  than  three  times 
as  large  as  it  should  have  been,  but  that  the  stock  was  badly 
assorted.  The  situation  became  so  strained  that  the  purchas- 
ing agent  was  forced  to  resign,  and  the  business  is  now  in 
financial   difficulties. 

Forced  Sales  at  a  Sacrifice. — The  other  instance  is  some- 
what similar.  The  purchasing  agent  for  a  talking  machine 
manufacturer  was  inexperienced.  The  firm  was  capitalized 
at  $250,000.  Business  had  been  very  good,  and  practically 
all  profits  had  been  tied  up  in  a  new  factory  building. 

When  the  period  of  business  depression  hit  them,  they 
found  that  they  had  $180,000  tied  up  in  inventory,  much  of 
which  was  later  sold  for  less  than  half  the  cost.  These  in- 
stances with  variations,  could  be  multiplied  indefinitely. 
No  doubt  many  business  houses  would,  however,  repeat 
their  errors  if  the  same  inflated  conditions  were  to  recur. 

Self-protection  a  Duty. — The  tactful  purchasing  agent 
who  is  connected  with  a  business  that  does  not  budget  Its 
income,  Its  sales,  and  its  expenditures  for  materials,  salaries, 
and  other  items,  owes  it  to  himself,  his  career,  and  his  family, 
to  see  that  he  Is  provided  with  the  means  of  knowing  just  what 
materials  will  be  needed  in  the  Immediate  future,  and  In  just 
what  quantities.  He  will  see  that  his  inventory  is  In  such 
condition  that  the  management  will  not  be  embarrassed,  no 
matter  what  turn  the  market  takes. 

One  must,  of  course,  recognize  the  peculiar  requirements 
of  every  business  In  drawing  up  a  budget.  The  budget  for 
a  foundry  would  hardly  fit  the  requirements  for  a  flour  mill, 
and  the  budget  for  an  automobile  plant  would  hardly  fit  the 
requirements  of  a  furniture  plant.  Each  has  more  or  less 
seasonal  and  other  variables  that  must  be  reckoned  with;  but 
the  basic  principle  of  budgeting  Is  sound,  and  If  adopted,  will 
result  in  the  salvation  of  many  business  houses. 


98     PURCHASING  PRINCIPLES  AND  PRACTICES 

Bibliography  of  Budgets. — For  the  student  who  wishes  to 
pursue  the  subject  of  buying  by  budget  farther,  I  suggest  the 
following  works: 

1.  AGGER,  EUGENE  E.,   "The  Budget  in  the  American  Commonwealth." 

2.  BARTHELEMY,  A.,  "Du  Controle  preventif  des  finances  publiques." 

3.  LOWRIE,   SELDEN   GALE,  "The  Budget." 

4.  STOURM,  RENE,  "The  Budget."    Translation  from  "Cours  des  Finances," 

Paris,    1913. 

University  of  Chicago  Budget. — The  method  of  control- 
ling the  purchases  at  the  University  of  Chicago  will  be  related 
in  detail  as  an  illustration  of  the  practical  operation  of  budget 
control  as  applied  to  an  institution. 

The  fiscal  year  ends  on  the  last  day  of  June.  In  January, 
the  auditor  asks  the  head  of  each  department  for  an  estimate 
of  the  expenses  he  expects  to  incur  during  the  next  fiscal  year. 
These  estimates  must  not  be  in  bulk,  but  must  show  in  con- 
siderable detail  salaries  and  the  various  other  expense  items, 
and  the  amount  of  money  the  department  head  thinks  he 
should  have  for  each. 

In  practice,  the  majority  of  department  heads  prepare 
tentative  lists  of  proposed  expenses,  and  then  discuss  each  list 
informally  with  the  auditor  before  formal  recommendations 
are  submitted  in  writing. 

The  auditor  meantime  prepares  a  detailed  estimate  of  the 
income  for  the  next  fiscal  year.  All  these  items  are  tabulated, 
together  with  comparative  figures  from  the  last  budget.  After 
all  these  items  are  in,  the  auditor  draws  up  a  tentative  budget 
which  is  submitted  to  the  budget  committee  of  the  board  of 
trustees  for  their  approval.  There  again,  the  general  plan  is 
to  discuss  the  tentative  budget  informally  before  the  formal 
budget  is  submitted  to  the  board  of  trustees.  The  reason  back 
of  these  informal  conferences  is  a  desire  to  get  the  point  of 
view  of  the  department  making  the  request.  If  the  request 
is  denied  it  is  owing  to  one  of  two  causes:  (a)  Because  the 
request  is  not  in  accord  with  the  policy  of  the  University;  (b) 
While  it  might  be  in  accord  with  the  policy  there  might  not  be 
sufficient  funds  to  care  for  it. 

Merely  a  Detailed  Estimate. — After  the  budget  has  been 
drawn  up  and  approved,  it  does  not  follow  that  the  various 
departmental  heads  can  at  once  proceed  to  incur  the  expense 


BUDGET  CONTROL  99 

items  in  the  budget.  The  budget  is  considered  merely  as  an 
estimate  in  detail  of  the  amount  that  will  be  needed  for  var- 
ious purposes  during  the  next  fiscal  year.  All  increases  in  the 
pay-roll  for  the  non-instruction  staff  items  must  be  approved  by 
the  committee  on  expenditures  before  they  become  operative. 

This  committee  on  expenditures  is  made  up  of  the  chairman 
lof  the  board  of  trustees,  the  president,  the  business  manager, 
the  auditor,  and  the  secretary  of  the  board  of  trustees. 

Purchasing  Materials. — When  any  department  needs  ma- 
terials, the  head  of  the  department  sends  to  the  purchasing 
agent  a  requisition  in  triplicate.  The  purchasing  agent  fills 
in  the  estimated  amount,  certifies  all  three  copies,  and  sends 
them  to  the  committee  on  expenditures. 

The  purchasing  agent,  acting  for  the  committee  on  ex- 
penditures, personally  investigates  all  requests  for  materials 
which  are  not  strictly  routine,  and  endorses  on  the  requisition 
a  statement  concerning  the  necessity  or  desirability  of  the 
incurring  of  expense.  If  the  committee  on  expenditures 
should  for  any  reason  refuse  to  approve  a  requisition,  the 
department  head  could,  if  he  desired,  present  his  case  to 
the  committee,   either  in  writing  or  in  person. 

Theory  and  Practice. — In  theory,  all  requisitions  are  held 
until  the  weekly  meeting  of  the  committee.  Actually,  the 
great  bulk  of  requisitions  are  passed  by  the  auditor  and  the 
secretary  of  the  board  of  trustees,  acting  for  the  committee  on 
expenditures.  When  a  given  requisition  has  been  approved  by 
the  committee  on  expenditures,  each  of  the  three  copies  is 
numbered,  and  the  estimated  amount  of  the  requisition  is  en- 
tered as  a  memorandum  charge  against  the  funds  which  have 
been  set  aside  for  the  use  of  that  particular  department. 

In  this  way  the  departmental  appropriation  is  mortgaged 
for  the  estimated  amount  of  the  purchase,  or  other  expendi- 
ture, before  the  expense  is  incurred.  The  original  copy  of 
the  requisition  is  retained  by  the  auditor,  the  duplicate  goes 
to  the  purchasing  agent  as  his  authority  to  incur  the  expense, 
and  the  triplicate  copy  goes  to  the  department  head. 

Unused  Balances  Cancelled. — Theoretically,  the  receipt 
of  the  duplicate  copy  of  the  requisition  by  the  purchasing 
agent  is  equivalent  to  the  notification  that  he  has  at  his  dis- 
posal the  amount  of  money  specified  for  the  use  of  that 
particular  department,  but  for  the  purpose  specified,  and  for 


100     PURCHASING  PRINCIPLES  AND  PRACTICES 

no  other.  Any  unused  balances  must  be  cancelled.  If  the 
purchasing  agent  receives  an  approved  requisition  authorizing 
him  to  buy  a  new  steam  sterilizer  for  $300,  and  he  succeeds 
in  purchasing  one  for  $250,  he  cannot  spend  the  other  $50 
sav^ed  for  a  media  rack.  The  other  $50  must  be  cancelled, 
and  the  requisition  must  be  included  in  his  next  monthly 
statement  to  the  auditor  of  requisitions,  to  be  cancelled. 

Blanket  Requisitions  for  Routine  Purchases. — As  a  matter 
of  fact,  all  routine  purchases  arc  covered  by  blanket  requisi- 
tions, drawn  for  the  purchase  of  "miscellaneous  items"  up  to  a 
given  amount.  All  petty  cash  disbursements  are  covered  by 
special  requisitions,  as  are  all  materials  drawn  from  the 
various  store  rooms. 

After  the  purchasing  agent  has  received  the  approved 
requisition,  the  purchasing  routine  is  not  very  different  from 
that  in  any  business  concern,  with  the  single  exception  that, 
when  a  purchase  order  is  issued  against  a  requisition,  the 
number  of  the  purchase  order  is  noted  on  the  face  of  the 
requisition,  together  with  the  amount  of  the  purchase.  In 
this  way  the  appropriation  is  mortgaged  by  the  requisition 
when  the  committee  authorizes  the  purchase,  and  the  requisi- 
tion is  mortgaged  when  the  purchase  order  is  issued.  Thus  it 
is  impossible  for  any  department  to  spend  more  than  the  sum 
set  aside  for  its  requirements. 

Control  of  Stock  Purchases. — When  materials  are  pur- 
chased for  stock,  they  are  purchased  without  the  specific 
approval  of  the  committee  on  expenditures,  and  the  amounts 
and  the  times  of  purchase  are  controlled  by  the  purchasing 
agent,  in  consultation  with  the  store  keepers.  When  this  ma- 
terial is  drawn  out  by  the  various  departments,  it  at  once 
becomes  a  charge  against  a  requisition.  The  only  limitation 
on  purchases  for  stock  is  the  total  amount  of  the  investment, 
which  is  fixed  by  the  board  of  trustees. 

The  Routine  Outlined. — The  purchasing  routine  is  cov- 
ered by  the  following  outline.  The  purchases  of  the  Uni- 
versity of  Chicago  are  of  six  distinct  classes  as  follows: 

I.  Departmental,  i.e.  delivered  and  billed  out  to  the  department 
II.  For   stock 

III.  For   resale 

IV.  Foods 

v.  Real  estate  maintenance;   apartment  and  residence  property 
VI.  City  buildings;  i.e.,  office  buildings 


BUDGET  CONTROL  101 

1.   Departmental  purchases. 

A.  An  appropriation  is  made  in  January  for  the  require- 
ments of  each  department  for  the  fiscal  year,  July  1st  to 
June  30th. 

B.  Requisition.  (See  Form  at  end  of  chapter.)  This  is 
drawn  by  the  head  of  the  department  in  triplicate,  and  for- 
warded to  the  purchasing  agent,  who  certifies  as  to  the  correct- 
ness of  the  amount,  and  sends  it  to  the  committee  on  expendi- 
tures. When  approved  and  numbered,  one  copy  goes  to  the 
purchasing  agent  as  his  authority  to  incur  the  expense,  one  copy 
goes  to  the  department  concerned,  and  one  copy  is  retained  by 
the  auditor.  Requisitions  may  be  either  for  specific  purchases 
or  for  miscellaneous  purchases  up  to  a  given  amount. 

C.  Request  to  purchase.  (See  Form  at  end  of  chapter.) 
( 1 )  This  comes  to  the  purchasing  agent  from  the  depart- 
ment giving  the  details  of  the  purchase  requested.  (2)  We 
encourage  the  department  to  give  detailed  information  as  to 
the  possible  price  and  source  of  supply.  (3)  The  department 
keeps  a  carbon  copy  of  the  request  to  purchase  for  reference. 
(4)  We  accept  many  orders  over  the  telephone  for  which  no 
written  request  is  made.  (5)  The  purchasing  agent  person- 
ally routes  and  initials  every  order  before  it  is  placed,  using 
the  following  abbreviations: 

a  P. — i.e.,  get  written  quotations  from  firms  indi- 
cated.     (See  Form  at  end  of  chapter.) 

b  P.&P. — i.e.,  get  telephone  quotation  from  firm 
indicated,   and  if  price  is  right,  place  the  order. 

c  P.P. — i.e.,  send  the  order  to  the  firm  indicated, 
with  a  request  that  they  telephone  their  quotation 
before  filling  the  order. 

d  P.L. — i.e.,  place  the  order  as  indicated,  using  the 
price  on  your  price-list. 

(6)  All  quotations,  blue  prints,  samples  (if  small),  corre- 
spondence, and  other  data  concerning  a  given  purchase  are 
attached  to  the  back  of  the  requests  to  purchase,  which  are 
filed  vertically,  under  the  number  of  the  purchase  order. 
This  number  is  written  in  the  upper  right  hand  corner  at  the 
time  the  order  is  written. 

D.  The  purchase  order  is  written  in  quadruplicate.  (See 
Form  at  end  of  chapter.)      (1)  Original  goes  to  the  vendor. 


102     PURCHASING  PRINCIPLES  AND  PRACTICES 

(2)  Duplicate  is  placed  numerically  in  the  unfilled  order  file, 
and  when  completed,  goes  to  the  filled  order  file  (vertical), 
and  is  later  transferred  to  a  binder.     All  files  are  vertical. 

(3)  Triplicate  is  a  receiving  slip  which  goes  to  the  department 
that  is  to  receive  the  goods.  This  is  signed  and  returned  to 
the  purchasing  agent's  office  as  his  authority  to  pass  the  bill. 

(4)  The  quadruplicate  is  sent  to  the  department  at  the  end  of 
the  month  as  a  detail  of  the  statement  of  purchases  for  the 
month. 

a  The  price  of  each  item  is  shown  on  all  copies  of 
the  order  in  nearly  every  instance.  Confidential  price 
arrangements  are,  of  course,  not  shown. 

b  Extra  blank  receiving  slips  are  furnished  the  de- 
partments for  use  on  back  orders. 

c  Theoretically,  no  bill  is  passed  for  payment  until 
some  responsible  person  has  acknowledged  receipt  of 
the  goods.  Actually,  many  bills  are  paid  before  the 
goods  are  received,  in  order  to  secure  cash  discounts. 
This  practice  has  never  yet  caused  any  loss.  When  the 
invoice  has  been  paid  before  the  receipt  is  turned  in,  the 
duplicate  and  the  quadruplicate  copies  are  held  in  a 
pending  file  until  the  receipt  arrives. 

E.  A  careful  monthly  record  is  kept  of  the  cash  discounts 
taken,  invoices  certified,  and  of  any  discounts  lost. 

F.  Because  of  the  perishable  nature  of  many  of  our  pur- 
chases, a  large  number  of  shipments  are  delivered  directly  to 
the  department,  instead  of  being  received  at  some  central  sta- 
tion. (1)  This  applies  especially  to  inflammables,  explosives, 
and  delicate  scientific  apparatus.  (2)  The  quadruplicate 
order  copy  goes  to  the  requisition  clerk,  who  notes  the  amount 
of  the  purchase  on  the  requisition  as  an  outstanding  order,  to 
prevent  an  overdraft,  and  is  then  placed  in  the  tracing  file, 
not  by  date,  but  by  department. 

a  As  most  of  our  purchases  are  made  in  Chicago  for 
immediate  shipment,  we  use  the  tracing  file  very  little. 

b  A  weekly  survey  of  the  unfilled  orders  is  suffi- 
cient. 

c  Copies  of  orders  requiring  special  attention  are 
kept  on  the  desk  of  the  chief  clerk  for  daily  check. 

G.  Order  Index.  (See  Form  at  end  of  chapter.)  Every 
order  issued  is  indexed  the  morning  after  it  is  made.      (1) 


BUDGET  CONTROL  103 

This  card  gives  the  firm  name,  address,  telephone  number, 
name  of  the  man  who  handles  our  account,  line  of  goods  han- 
dled, and  the  number  of  the  catalogue.  (2)  We  number  our 
catalogues  from  1  up,  regardless  of  size.  If  the  catalogue 
is  big  enough  to  stand  up,  it  goes  on  the  book  shelves;  if  it 
is  too  small  for  that,  it  goes  in  a  pamphlet  box.  (3)  See 
chapter  No.  VII  for  details  of  filing  catalogues. 

H.  Checking  invoices.  ( 1 )  All  extensions  are  checked 
on  the  comptometer  as  soon  as  the  invoices  are  received.  (2) 
The  two  office  copies  of  the  order,  and  the  signed  receipt, 
are  held  together  on  a  spring  clip  bill  board;  carbons  are 
inserted,  and  the  unit  price,  discounts,  totals,  date,  and 
amount  of  the  invoice  are  filled  in. 

a  Invoice  is  stamped  and  initialed. 

b  The  order  copies  accompanying  the  invoice  go  to 

the  purchasing  agent  for  final  approval  for  payment. 

This  makes  a  huge  pile  of  papers  every  day,  but  the 

whole  history  of  the  transaction  is  at  hand  when  the 

bills  are  certified. 

c  All  invoices  are  listed  on  long  sheets  and  sent  to 

the  auditor  for  payment  at  the  end  of  each  month. 

Discount  bills  are,  of  course,  sent  up  daily.    (See  F'orm 

at  end  of  chapter.) 

I.  Price  Listing.  (See  Form  "Purchasing  Record  Card" 
at  end  of  chapter.)  In  normal  times  all  purchases  are  listed 
on  a  subject  card  index. 

J.  Requisitioning.  (See  Form  at  end  of  chapter.)  The 
triplicate  and  quadruplicate  order  copies  which  are  now  prac- 
tically copies  of  the  invoice  go  to  the  requisition  clerk,  who 
transfers  the  order  from  the  outstanding  list  to  the  completed 
list  on  the  requisition  blank.  This  double  requisitioning  of 
orders  may  seem  unnecessary,  but  it  forms  an  air-tight  check 
upon  the  tendency  of  any  department  to  exceed  its  appro- 
priation. 

K.  Every  thirty  days  we  send  each  department  a  state- 
ment of  the  purchases  made  during  the  past  month.  (See 
Form  "Statement  of  Account,"  at  end  of  chapter.)  This  is 
merely  a  summary  showing  the  order  number,  the  requisition 
number,  and  the  amount.  This  is  accompanied  by  the  quad- 
ruplicate order  copies  which  give  the  details  of  the  transaction. 
(1)    A  summary  of  the  billing  is  sent  to  the  auditor  from 


104     PURCHASING  PRINCIPLES  AND  PRACTICES 

which  he  charges  the  department  and  credits  the  purchasing 

agent's  stores  account. 

a  This  billing  also  includes  laboratory  storeroom 
charges  which  are  made  out  in  triplicate  in  the  store- 
room. 

2.  Purchases  for  stock  differ  from  departmental  purchases 
m  the  following  respects  : 

A.  Requests  to  purchase  are  made  by  head  store-keepers, 
who  are  under  the  direction  of  the  purchasing  agent.  Many 
stock  purchases  originate  in  the  purchasing  agent's  office. 

B.  No  requisitions  are  required,  the  only  limitations  being 
the  total  investment  in  stock. 

C.  As  soon  as  invoices  are  checked,  the  quadruplicate  order 
copy  is  sent  to  the  stores  department  from  which  prices  are 
taken  for  daily  charges.  These  storeroom  charge  slips  are 
made  out  in  triplicate,  showing  quantity,  price,  and  totals. 

D.  Stock  purchases  are  not  billed,  but  invoices  are  charged 
direct  to  the  stores  account  from  the  distribution  sheet. 

3.  Purchases  for  resale. 

A.  Because  most  of  the  purchases  for  resale  are  books 
and  standard  stationery  items,  a  price  list  card  is  used  as  a 
request  to  purchase.  This  same  card  is  used  over  and  over 
again.  When  the  book  stock  clerk  wants  to  purchase  a  title, 
he  locates  the  card  which  is  filed  under  the  name  of  the 
author,  notes  the  number  of  books  required,  and  gives  it  to 
the  order  clerk  to  have  the  purchase  completed  and  recorded. 

4.  Foods. 

All  food  stuffs  for  the  eight  dining-rooms  are  selected  by  the 
head  of  the  commissary  department,  who  is  held  responsible 
for  these  purchases. 

5.  Real. estate  maintenance. 

These  consist  largely  of  coal  and  building  materials  for 
repairs.  The  invoices  for  these  purchases  are  charged  to  the 
specific  building  by  the  auditor.  Otherwise,  these  purchases 
are  handled  like  stock  purchases. 

6.  City  office  buildings  maintenance. 

The  purchases  for  the  office  buildings  are  handled  exactly 
like  those  of  the  real  estate  department,  but  are  of  a  some- 
what different  class  of  materials. 


BUDGET  CONTROL 


105 


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NOIXVMOJUad  3HX  IV  A1N0  UJHB  HSVUO  JSVairi 


i06     PURCHASING  PRINCIPLES  AND  PRACTICES 


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BUDGET  CONTROL 


107 


«anlver0itp  of  Cbicago 

Oac<  of  tbe  puccBaelnfl  n^cnt 


ORDER  BLANK 

ORIGINAL 


Pltast  furnish  on  auount  Iht  folUmnng  arliclis.  SEND  BILLS  TO  TBE  VNDERSIC\ED  m  stum  as  nuUtrM  is  {onxuiid. 
This  order  is  subject  to  pmaitirtg  cash  discount  ij  paid  on  or  before  the  tenth  day  of  the  month  following  purchase,  and  must  be  fret  of 
delivery  charges.    Advise  us  if  you  are  unable  to  fill  any  part  of  this  order.    BilU  mutt  b«Ar  our  order  number. 


Order  No.  A     - 

Put  above  number  on  your  invoice 
and  on  every  package. 


Zbe  innlperelt?  of  Cbtcago 

9tnce  01  tbe  putcbaeins  ngent 


ORDER  BLANK 

DUPLICATE 


Please  furnish  on  account  the  foUawini  articles.  SEND  BILLS  TO  THE  UNDERSIGNED  as  soon  as  material  is  forwarded. 
This  order  is  subject  to  prevailing  cash  discount  if  paid  on  or  before  the  tenth  day  of  the  month  following  purchase,  and  must  be  free  of 
delivery  charges.    Advise  us  if  you  are  unable  to  fill  any  part  of  this  order.    Bills  mu»t  bear  our  order  number. 


Cbc  innjversltp  of  Cbtcaflo 

StScc  01  tbc  puicbaems  ngent 


ORDER  BLANK 

TRIPLICATE 


Tkis  feceipl  must  be  signed  and  returned  to  the  office  of  lie  Purchasing  Agent,  Room  J,  Press  Building,  IMMEDIATELY  UPON 
RECEIPT  OF  TBE  GOODS  ORDERED. 


QUAKTITY         DeTT, 


ttbc  TOnlvcrett?  of  Cbtcago 

ffOcc  ot  tbe  putcbaelnfl  Ttgent 


ORDER  BLANK 

QUADRUPLICATE 


This  copy  is  inlMed  as  a  permanent  record  of  tlie  goods  ordered  by  your  department.    Please 

plaee  this  in 

yourflhfo 

r  reference. 

QUAMTtlY 

Dept.                                                                                     Rki. 

Peice 

i 

Ube  xanivetsltv  ot  Gbfcago 


fur(i«juii  Atm 


"purchase  order"  form 


1U8     PURCHASING  PRINCIPLES  AND  PRACTICES 
Sbe  TDnivereits  of  dbtcaao 

9nc<  ot  tlx  putcbaeina  Jlocnl 

CHICAOO 

REQUEST  FOR  QUOTATIONS 

Inquiiy  for  Dept. 
Date 


Please  quote  price  on  material  as  listed  below  delivered  at  the  University.    Submit  quotation  en  this  form,  pladnfl 
price  opposite  items  listed.    The  right  is  reserved  to  accept  or  reject  all  or  part  of  proposal  submitted. 


Note:  This  is  not  an  order 


Signature  of  6nD  herp 


"REQUEST    FOR   QUOT.^TIONS"    FORM 


CATALOCUe  NO.  . 


PHONE   _ 

SALESMAN 

ORDER 

ORDER 

ORDER 

ORDER 

ORDER 

ORDER 

ORDER 

ORDER 

' 

3M     J-Jl 

UborrSmu 

1|.a>lt 

"order  index"  card 


BUDGET  CONTROL 


109 


110     PURCHASING  PRINCIPLES  AND  PRACTICES 


—  ' ^~<. 

•-.    '....- 

.~. 

.^. 

'' 

1 



— 

• 

* 

L 

1 

.1 

"purchasing  record"  card 


Sbc  Tanlvcreit;  of  (Tbi^flO 

ffOce  or  toe  purcbaelna  TIgcrit 


STATEMENT  OF  ACCOUNT 


'STATEMENT    OF    ACCOUNT"    FORM 


Chapter  XIV 

PROBLEMS  IN  PURCHASING  LUMBER 

A  Problem  That  Is  Different. — The  purchasing  agent  who 
buys  large  quantities  of  lumber  has  a  problem  that  is  just  a 
little  different  from  that  connected  with  the  scientific  purchase 
of  any  other  commodity.  Lumber  is  like  coal  in  that  it  is 
not  a  manufactured  article,  and  you  never  get  two  shipments 
exactly  alike.  The  cheapest  and  best  lumber  for  a  given  pur- 
pose in  Chicago  might  not  be  at  all  economical  for  the  same 
purpose  in  New  York.  Moreover,  the  factors  which  deter- 
mine the  right  lumber  to  use  for  a  given  purpose  change,  not 
only  with  the  locality,  but  change  from  season  to  season,  and 
sometimes  within  the  season. 

There  have  been  combinations  of  circumstances  which 
made  it  economical  to  use  mahogany  logs  for  railroad  ties. 
Sometimes  it  is  economical  to  import  ties,  and  sometimes  it 
is  economical  to  use  domestic  ties.  After  the  armistice  was 
signed,  short  lengths  of  walnut  timbers  designed  for  the 
manufacture  of  gunstocks  were  a  drug  on  the  market,  and 
were  used  as  bases  for  heavy  machinery.  In  ordinary  times 
it  would  be  the  grossest  extravagance  to  use  selected  walnut 
for   that   purpose. 

Only  an  Expert  Can  Beat  the  Game. — There  are  so  many 
different  grades  of  lumber,  the  different  grades  shade  off  into 
one  another  so  imperceptibly,  and  the  grading  rules  vary  so 
widely  in  different  parts  of  the  country,  that  the  purchasing 
agent  who  Is  not  a  lumber  expert  has  little  chance  to  beat  the 
game,  if  he  goes  it  alone.  The  one  and  only  way  to  be  sure 
that  you  are  getting  the  most  value  for  the  dollars  you  are 
spending,  is  to  make  the  acquaintance  of  two  or  three  old 
lumber  salesmen,  and  rely  upon  their  suggestions  and  advice. 
If  you  treat  them  fairly,  they  will  treat  you  fairly,  and  by 
using  the  friendly  services  of  several  of  them  you  can  use 
the  advice  and  information  of  one  to  check  the  advice  and  in- 
formation of  the  other,  and  so  you  cannot  go  far  wrong. 

If  you  blindly  follow  the  lumber  specifications  given  you 
by  your  production  department  without  giving  the  salesmen  a 

tv 


1 1 2     PURCHASING  PRINCIPLES  AND  PRACTICES 

chance  to  make  suggestions,  you  will  miss  many  opportunities 
for  economies.  For  instance,  it  is  a  common  practice  among 
carpenter  foremen  to  specify  sixteen  foot  lengths.  Many  of 
these  sixteen  foot  lengths  are  actually  cut  to  eight  foot  and 
less  when  used.  You  can  effect  a  considerable  saving  by 
ordering  the  same  number  of  board  feet  in  eight  foot  lengths. 
Many  foremen  specify  lumber  much  wider  than  they  really 
need.  Often  it  is  cheaper  and  better  to  buy  lumber  in  shorter, 
narrower  pieces  than  those  originally  specified. 

Care  in  Changing  Specifications. — It  goes  without  saying 
that  the  inexperienced  purchasing  agent  should  be  very  sure 
that  he  knows  what  he  is  doing  when  he  changes  specifications. 
He  should  be  very  sure  that  the  lumber  he  is  specifying,  and 
the  lumber  he  receives  is  identical;  and  very  sure  that  the 
men  who  have  to  use  the  lumber,  and  the  men  who  are  re- 
sponsible for  the  quality  of  the  finished  product  are  in  sym- 
pathy with  the  changes  he  makes. 

The  United  States  produces  lumber  from  more  than  500 
varieties  of  trees.  Moreover,  the  value  of  the  lumber  from 
a  tree  of  a  given  species  depends  not  only  upon  the  supply 
and  demand  for  that  particular  kind  of  lumber,  but  also 
upon  the  region  in  which  that  particular  tree  was  grown,  and 
the  direction  and  strength  of  the  winds  in  that  locality,  the 
thickness  of  the  forest,  and  the  amount  of  moisture  in  the 
soil  from  which  it  sprang. 

When  a  tree  grows  in  a  thick  forest,  it  has  a  long  straight 
trunk,  and  the  few  lower  branches  it  does  have  soon  die  for 
lack  of  light,  and  drop  off.  This  leaves  a  clean,  straight  bole, 
but  when  the  wouna  left  by  the  falling  branch  does  not  quite 
close  up,  this  defect  shows  up  as  loose  knots  in  the  finished 
lumber. 

Hardships  Toughen  Trees.  — When  a  tree  lives  under 
ideal  growing  conditions,  the  amount  of  growth  it  attains  each 
year  is  much  greater  than  that  of  a  tree  growing  under  ad- 
verse conditions.  The  wood  produced  by  trees  that  live 
under  ideal  conditions  is  softer,  and  possesses  much  less  ten- 
sile strength,  and  is  capable  of  withstanding  much  less  me- 
chanical wear  under  service. 

In  other  words,  in  specifying  dense  yellow  pine,  you  are 
specifying  not  only  the  species  from  which  you  wish  the  lum- 
ber to  come,  but  you  are  specifying  the  conditions  under 
which  the  lumber  must  have  grown. 


PROBLEMS  IN  PURCHASING  LUMBER       113 

Commercial  timbers  are  divided  Into  two  general  classes: 
hard  woods  and  soft  woods.  This  division  is  merely  a  mat- 
ter of  custom,  and  Is  not  based  upon  the  actual  hardness  or 
softness  of  the  wood  fibre.  While  the  line  Is  not  closely 
drawn,  it  is  true  that  the  majority  of  the  woods  classed  as 
hard  woods  are  harder  than  the  majority  of  those  classed  as 
soft  woods. 

Hard  and  Soft  Groups. — In  the  soft  wood  group  we  find 
the  pines,  hemlocks,  firs,  spruces,  and  a  few  minor  varieties. 
These  are  known  as  the  needle  leaf  varieties,  and  most  of 
them  belong  to  the  evergreens. 

There  are  a  great  many  varieties  of  hard  woods,  but  in 
general  all  broad  leaf  trees  are  classified  as  hard  woods.  The 
principal  commercial  hard  woods  are  oak,  hickory,  birch, 
beech,  and  walnut.  Soft  woods  are  used  mostly  for  struc- 
tural purposes,  and  the  hard  woods  mostly  for  furniture  and 
for  interior  trim.  Both  types  of  wood  are  used  for  boxing 
and  crating. 

Practically  all  woods  contain  both  heart  and  sap  wood. 
The  sap  wood  is  that  which  lies  just  inside  the  bark,  and 
through  which  the  sap  still  flows.  As  the  tree  grows  It  adds 
new  rings  of  sap  wood,  and  the  inner  rings  of  the  sap  wood 
gradually  cease  to  carry  sap,  and  turn  into  heart  wood. 
Heart  wood  Is  much  preferred,  because  it  Is  stronger  and 
denser  than  the  sap  wood,  and  because  It  Is  less  subject  to 
decay. 

Why  Wood  Decays. — The  decay  In  wood  is  caused  by  a 
fungus  very  similar  to  the  fungus  which  causes  the  decay  of 
fruits.  In  order  to  grow,  this  fungus  must  have  warmth  and 
moisture,  and  the  less  moisture  the  lumber  contains,  the  less 
liable  it  Is  to  decay.  The  growth  of  the  fungus  may  be  pre- 
vented by  excluding  the  air  by  creosoting,  or  by  other  similar 
processes,  but  this  adds  greatly  to  the  expense. 

In  this  connection  may  I  call  attention  to  the  factors  which 
enter  Into  the  determination  either  to  treat  railroad  ties  or 
not  to  treat  them.  Theoretically,  the  treating  of  railroad  ties 
would  add  greatly  to  the  life  of  the  ties  as  It  prevents  decay. 
If  the  ties  are  on  a  line  where  liability  to  decay  Is  great,  and 
where  traffic  is  comparatively  light,  there  can  be  little  ques- 
tion as  to  the  desirability  of  creosoting. 

Where  Creosoting  Doesn't  Pay. — If,  however,  the  ties 
are  for  an  elevated  street  railway.  It  does  not  pay  to  creosote. 


1 14     PURCHASING  PRINCIPLES  AND  PRACTICES 

because  heavy  traffic  actually  wears  out  the  ties  before  they 
could  decay.  Again,  it  would  add  an  undue  fire  hazard  to 
creosote  ties  used  for  the  railroad  in  a  mine.  There  is  an- 
other process  of  treating  ties  known  as  the  zinc  method,  but 
this  process  cannot  be  economically  used  for  electric  railroads 
because  of  the  action  between  treated  ties  and  the  electrically 
charged  rails. 

Because  problems  connected  with  the  purchase  of  lumber 
are  so  complicated,  it  is  practically  impossible  for  the  pur- 
chasing agent  to  master  all  the  intricacies  in  a  short  time. 
If  you  have  a  particular  problem  that  has  not  been  solved 
to  your  complete  satisfaction  there  are  open  to  you  the 
following  authoritative  sources  of  Information:  Various 
associations  of  lumber  dealers,  publications  of  the  Forestry 
Bureau,  Washington;  and  of  the  Forestry  Department  of  the 
University  of  Wisconsin,  Madison,  Wisconsin. 

The  University  of  Wisconsin  is  equipped  to  make  exhaus- 
tive investigations  of  special  problems  connected  with  the  pro- 
duction of  and  uses  to  which  lumber  and  lumber  products  are 
put.  If  you  spend  a  good  deal  of  money  every  year  for  lum- 
ber and  lumber  products.  It  would  pay  you  to  spend  a  few 
days  In  the  laboratory  of  the  Forestry  Department  of  the 
University  of  Wisconsin. 

If  you  have  the  time  or  inclination  to  pursue  the  study  of 
the  problems  connected  with  the  purchasing  and  utilization 
of  lumber,  I  refer  you  to  the  following  publications: 

Lumber 

Kellogg,  Royal  Shaw,  "Mine  Timbers,"  Forest  Service, 
Circular  No.  49. 

Betts,  Harold  Scofield,  "Lumber  Saved  by  Using  Odd 
Lengths,"  Forest  Service,  Circular  No.  180. 

"The  Seasoning  of  Wood,"  U.  S.  Department  of  Agricul- 
ture Bulletin  No.  582,  also  509  professional  paper.  See  also 
Bulletin  No.  104  of  the  Forest  Products  Laboratory. 

"Sawmill  Statistics,"  Forest  Service  Circular  No.  107. 

Bryant,  Ralph  Clement,  "By-Products  of  the  Lumber  In- 
dustry," Special  Agents'  Series  No.  110,  U.  S.  Department 
of  Commerce. 

"Prices  of  Lumber,"  Government  Printing  Office. 


PROBLEMS  IN  PURCHASING  LUMBER       115 

Butler,  Ovid  McQuat,  "The  Wholesale  Distribution  of 
Softwood  Lumber  in  the  Middle  West,"  U.  S.  Department  of 
Agriculture  Report  No.  115. 

Dunlap,  Frederick,  "Kiln  Drying  Hardwood  Lumber." 

Trade  Journals 

"American  Lumberman." 
"Lumber  Trade  Journal." 


Chapter  XV 

PAPER' 

A  Great  World  Industry. — The  indomitable  Mr.  H.  G. 
Wells,  in  his  "Outline  of  History,"  expresses  the  opinion,  in 
discussing  the  "Renascence  of  Western  Civilization,"  that  it 
was  paper  that  made  the  "revival  of  Europe  possible."  He 
adds  that  "not  until  the  end  of  the  fourteenth  century  was 
paper  abundant  and  cheap  enough  for  the  printing  of  books 
to  be  a  practicable  business  proposition.  Thereupon  printing 
followed  naturally  and  necessarily,  and  the  intellectual  life  of 
the  world  entered  upon  a  new  and  far  more  vigorous  phase." 

Be  this  as  it  may,  it  is  at  least  indisputable  that  paper  has 
become  one  of  the  necessaries  of  modern  life;  and  the  paper 
industry  has  grown  until  it  is  one  of  the  great  industries  of  the 
world.  This  growth  has  really  been  an  accompaniment  of  the 
amazing  economic,  industrial,  and  intellectual  development 
which  has  characterized  the  Nineteenth  and  Twentieth 
Centuries. 

It  was  not,  for  instance,  until  early  in  the  Nineteenth 
Century  that  the  Fourdrinier  paper  machine  was  invented,  and 
it  was  not  until  the  third  quarter  of  the  Nineteenth  Century 
that  wood  pulp  came  to  be  the  principal  raw  material  for  the 
manufacture  of  paper. 

Production  in  the  United  States. — Today,  the  manufac- 
ture of  paper  of  all  kinds  and  of  wood  pulp  ranks  about  fif- 
teenth (in  value  of  product)  among  the  industries  of  the 
United  States.  The  output  of  paper  in  1920  was  about 
7,335,000  tons,  or  about  140  lbs.  per  capita;  whereas  in  1899 
the  total  production  was  about  2,200,000  tons,  or  about  57 
lbs.  per  capita;  and  in  1920  the  value  of  the  various  paper  pro- 
ducts produced  in  the  United  States  was  more  than  $1,000,- 
000,000.  The  7,335,000  tons  produced  in  1920  represented 
about  90  per  cent,  of  the  capacity  of  the  1653  paper  machines 
in  the  818  paper  mills  then  operating  in  the  United  States.  In 
the  total  of  7,335,000  tons  were  included:  paper — or  box- 

'By  C.  C.  Whinery,  of  R.  R.  Donnelley  &  Sons  Co.,  Chicago. 

116 


PAPER  117 

board,  2,323,000  tons  (value,  about  $200,000,000);  news- 
print, 1,512,000  tons  (value,  about  $1,500,000)  ;  wrappings, 
1,404,000  tons;  book  paper,  1,405,000  tons  (value,  about 
$220,000,000);  fine  papers,  389,000  tons  (value,  about 
$1,500,000);  felts  and  building  papers,  367,000  tons;  and 
tissues,  178,000  tons. 

All  Must  Buy  Paper. — Paper,  indeed,  is  one  of  the  com- 
paratively few  commodities  which  anyone  who  buys  anything 
— certainly  any  purchasing  agent — must  of  necessity  buy. 
Unfortunately,  the  manufacture  of  paper  has  not  yet  attained 
in  all  respects  the  status  of  an  exact  science.  Therefore,  the 
buying  of  paper  must  often  be  done  upon  an  empirical,  rather 
than  upon  a  purely  scientific,  basis — by  the  method,  that  is, 
which  psychologists  are  fond  of  calling  the  method  of  "trial 
and  error." 

One  should,  for  example,  bear  in  mind  that  the  quality  and 
various  important  characteristics  of  any  lot  of  paper  are  de- 
termined not  alone  by  its  constituents,  but  also,  and  sometimes 
predominantly,  by  the  judgment,  the  efficiency,  the  experience, 
and  the  skill  of  the  mill  superintendent  or  operative.  It  is 
for  this  reason  that  the  answer  given  by  a  famous  painter  to 
an  inquisitive  neophyte  has  been  paraphrased  into  the  state- 
ment that  paper  is  made  out  of — materials  and  brains. 

In  a  single  chapter  it  would  be  impossible  to  deal  specifically 
with  all  of  the  many  kinds  of  paper,  or  to  deal  exhaustively 
with  any;  and  this  chapter,  therefore,  will  be  limited  to  a 
brief  consideration  of  those  papers  which  are  probably  of 
greatest  interest  to  the  greatest  number — that  is,  to  papers 
commonly  known  as  newsprint,  book  papers,  and  writing 
papers. 

Buyers'  Minimum  Equipment. — In  general,  it  may  be  said 
that  the  buyer  of  paper  who  wishes  to  buy  judiciously  and  in- 
telligently needs  as  a  minimum  the  following  equipment:  He 
must  be  familiar  with  the  different  kinds  and  grades  of  paper, 
and  with  the  principal  mill  brands  and  merchants'  brands,  and 
their  characteristics;  he  must  have  at  least  an  elementary 
knowledge  of  the  principal  manufacturing  processes;  he  must 
have  a  general  knowledge  of  the  materials  used  in  the 
manufacture  of  different  kinds  of  paper,  and  of  the  character- 
istics of  these  materials,  and  must  know  what  distinctive  quali- 
ties each  Imparts  to  the  paper  of  which  It  Is  an  ingredient;  he 
must  know  how  paper  is  marketed;  he  must  be  able  to  ap- 


1 1 8     PURCHASING  PRINCIPLES  AND  PRACTICES 

praise  samples,  and  to  select  with  judgment  a  paper  which  is 
best  adapted  to  the  specific  purpose  in  view;  he  must  know 
how  to  inspect  and  test  papers;  he  must  be  familiar  with  so- 
called  "trade  customs";  and  finally,  he  must  keep  In  touch 
with  the  broad  movements  of  the  industry,  and  with  market 
and  business  conditions  in  general,  if  he  Is  to  decide  wisely 
when  to  buy  freely  and  when  to  buy  sparingly. 

The  Buyer's  Personality. — With  all  this  equipment,  how- 
ever, the  purchasing  agent  concerned  with  the  buying  of  paper 
would  be  unfitted  for  his  task  unless  he  had  as  well  certain 
fundamental  qualities  which  are  necessary  for  effective  and 
wise  buying  of  any  commodity.  He  must  be  scrupulously  fair 
and  impartial;  he  must  be  able  to  select  the  best  sources  of 
supply;  he  must  establish  relationships  of  good  will  and  mutual 
confidence  with  manufacturers,  merchants,  and  brokers;  and 
above  all,  and  as  a  matter  of  course,  he  must  have  common 
sense  and  good  judgment. 

Constituents  of  Paper. — Paper  has  been  well  defined  as 
"an  aqueous  deposit  of  vegetable  fibre."  The  fundamental 
constituent  is  cellulose  (chemical  formula,  OHioO^)  an  inert 
substance,  almost  insoluble;  and  a  paper  can  be  made  from 
any  plant. 

In  practice,  however,  only  a  few  kinds  of  vegetable  fibre 
have  so  far  been  used  to  any  extent — both  because  these  few 
are  Intrinsically  better  than  others  for  this  purpose,  and  be- 
cause they  are  available  In  such  form  and  in  such  quantity  as 
to  make  them  commercially  suitable.  For  centuries  prior  to 
the  Nineteenth  Century,  paper  was  made  almost  exclusively  of 
cotton  and  linen  rags;  that  is,  of  flax  and  cotton  cellulose  fibres. 
The  best  papers  are  still  made  of  these  materials,  chiefly  be- 
cause they  have  a  very  high  cellulose  content,  and  also  because 
flax  and  cotton  fibres  are  distinctively  long  and  strong.'  Rags, 
however,  vary  greatly  in  quality,  and  some  rag  papers  are  con- 
spicuously inferior  to  others,  and  even  to  papers  made  chiefly 
or  wholly  of  wood  pulp. 

Mechanical  Wood  Pulp. — In  1918  more  than  five  and  one- 
quarter  millions  of  cords  of  wood  were  consumed  in  America 
in  the  manufacture  of  wood  pulp.  Wood  first  came  into  gen- 
eral use  for  this  purpose  about  1840,  when  a  process  of  grind- 
ing wood  blocks   was   developed.      This   process   yields   the 

*The  cellulose  content  of  different  plant  fibres  varies  widely;  for  cotton  it  is 
about  90  percent.,  for  flax  about  80  percent.,  for  jute,  about  64  percent.,  for  wnite 
spruce,  about  57  percent.,  and  for  straw,  about  40  percent. 


PAPER  119 

so-called  mechanical  or  ground  wood  pulp,  which  contains  all 
of  the  Impurities  of  the  wood  (e.g.,  the  so-called  llgnlns,  which 
readily  oxidize  upon  exposure  to  air),  and  whose  fibres  are 
short  and  weak. 

Paper  made  chiefly  of  mechanical  wood  pulp  is  therefore 
short-lived,  discolours  readily,  and  has  little  strength. 
Ground  wood  paper,  however,  serves  admirably  for  news- 
papers, because  it  is  relatively  cheap,  is  opaque,  and  is  so 
absorbent  that  ink  quickly  dries  as  the  paper  is  printed. 

Chemical  Wood  Pulp. — After  the  American  Civil  W??r,  so- 
called  chemical  wood  pulp  became  available  (through  the 
invention  of  the  sulphite  process  by  Benjamin  C.  Tilghmann, 
an  American)  for  use  commercially  on  a  large  scale.  This 
pulp  is  produced  by  separating  through  chemical  action  the 
cellulose  in  the  wood  from  all  impurities.  The  processes  most 
commonly  used  are  those  known  as  the  sulphite  (acid),  soda 
(alkaline),  and  sulphate  (alkaline)  processes;  and  the  pulps 
resulting  therefrom  bear  these  same  names.  In  the  sulphite 
process,  bisulphite  of  lime  Is  used  as  the  solvent;  In  the  soda 
process,  caustic  soda;  and  In  the  sulphate  process,  a  combina- 
tion of  sulphate  of  soda,  sulphide  of  soda,  sodium  hydroxide, 
and  sodium  carbonate. 

Sulphite  pulp  is  the  most  common  constituent  of  book 
papers  of  all  kinds.  It  Is  used  extensively  in  making  cheaper 
grades  of  bond  and  writing  papers;  and  in  newsprint  it 
is  used  to  bind  and  give  strength  to  the  ground  wood,  usually 
from  20  per  cent,  to  25  per  cent,  of  sulphite  being  combined 
with  from  80  per  cent,  to  75  per  cent,  of  ground  ^vood. 
Mitscherlich  pulp  is  a  variety  of  sulphite  made  by  a  more  pro- 
longed treatment  of  the  wood  blocks  with  comparatively  weak 
acid;  paper  made  of  it  Is  tougher  and  stronger  than  that  made 
of  ordinary  sulphite. 

A  paper  made  of  sulphite  alone,  without  considerable 
"loading,"  or  without  an  admixture  of  other  kinds  of  pulp, 
would  be  unduly  transparent.  Soda  pulp  is  used  in  many 
papers  In  combination  with  sulphite.  It  is  inferior  in 
strength,  but  imparts  softness  and  mellowness  and  greater 
bulk  to  a  sheet.  If,  however,  an  excess  is  used,  the  paper  is 
likely  to  be  "fuzzy,"  and  thus  cause  trouble  in  the  pressroom, 
particularly  in  offset  printing. 

Sulphate  pulp  produces  an  exceptionally  strong  paper, 
and    is    the    principal    constituent    of    such    papers    as    Kraft 


120     PURCHASING  PRINCIPLES  AND  PRACTICES 

wrapping  papers.  For  sulphite  and  sulphate  pulp  as  well  as 
for  the  best  mechanical  pulp,  spruce  and  hemlock  are  most 
used;  for  soda  pulp,  poplar,  aspen,  balsam,  beech,  and  pine. 
Highly  resinous  woods  are  suitable  for  the  soda  or  the  sul- 
phate, but  not  for  the  sulphite  process. 

Additional  Sources  of  Fibre. — Other  fibre-contributing 
materials  used  commercially  are  waste  paper,  and  straws 
and  grasses  such  as  (in  England)  esparto,  a  grass  which 
grows  In  Spain  and  In  North  Africa.  For  straws  and 
grasses  the  soda  process  chiefly  Is  used.  Old  and  waste 
papers  are  used  very  extensively,  especially  perhaps  in  the 
Middle  West,  not  only  in  manufacturing  boards,  but  also  as 
a  principal  or  important  constituent  of  all  kinds  of  book  pa- 
pers, and  often  with  unsatisfactory  results,  because  (among 
other  reasons)  the  waste  papers  may  have  been  Improperly 
sorted,  and  the  fibres  are  likely  to  be  weakened  in  being  re- 
worked Into  new  paper. 

Non-fibre  Materials. — The  principal  constituents  of  paper, 
other  than  vegetable  fibres,  are :  ( 1 )  sizing  materials,  chiefly 
rosin  or  vegetable  size,  and,  for  the  finer  papers,  animal  size, 
or  gelatine.  The  function  of  the  size  Is  to  make  the  paper  more 
resistant  to  moisture,  and  thus  more  capable  of  "carrying"  ink; 
blotting  paper,  for  Instance,  is  wholly  unsized.'  (2)  Loading 
materials  or  fillers.  The  principal  filler  Is  a  very  fine  china 
clay  (a  hydrated  aluminum  silicate),  the  best  of  which  Is  Im- 
ported from  England,  though  much  American  clay  is  now  used. 
This  loading  adds  weight,  and  gives  opacity  and  smoothness 
of  surface  to  the  paper.  Other  fillers  sometimes  used  are 
talc,  asbestine,  precipitated  chalk,  and  various  forms  of  calcium 
sulphate,  such  as  gypsum  and  pearl  hardening. 

Bleaches,  Dyes  and  Colours. — Among  the  minor  constitu- 
ents, though  often  very  Important,  are  bleaching  agents 
(chiefly  chlorine),  and  dyes  or  colouring  agents  (sometimes 
pigments  or  mineral  colours  which  act  as  fillers  also,  and  some- 
times dyestuffs  or  aniline  dyes)  ;  these  are  required  not  only  for 
all  coloured  or  tinted  papers,  but  even  for  the  so-called  white 
papers.    These  white  papers  are  generally  classified,  as  regards 

'The  rosin  size  is  applied  in  the  beater  (referred  to  hereafter),  where 
it  is  precipitated  from  solution  by  sulphate  of  aluminum  or  alum;  the  animal 
size  is  applied  by  running  the  paper  through  a  vat  of  gelatine  after  it  leaves 
the  paper  machine.  Hence,  rosin-sized  papers  are  called  "engine-sized"  and 
animal-sized  papers  are  called  "tub-sized"  papers.  An  unsized  pure  cellulose 
paper  is  called  "water-leaf." 


PAPER  121 

colour,  as  "natural"  (for  which  no  dye  or  very  little  is  used), 
"pink-white"  (for  which  a  red  dye  is  used),  and  "blue-white" 
(for  which  a  bkie  dye  is  used). 

Coated  Paper. — The  so-called  coated  papers  consist  of  a 
base  of  ordinary  paper  (frequently  of  poor  quality),  cov- 
ered either  on  one  or  both  sides  by  a  mixture  of  casein  (or 
sometimes  glue  or  starch),  and  a  coating  material,  such  as 
china  clay,  blanc  fixe  (barium  sulphate),  or  satin  white  (a 
combination  of  calcium  sulphate  and  aluminum  hydrate).  The 
function  of  the  casein  (glue  or  starch),  is  to  make  the  coating 
adhere  firmly  to  the  body  of  the  paper.  The  coating  ma- 
terials provide  a  smooth,  even  printing  surface,  so  that  coated 
papers  are  especially  in  demand  for  fine  half-tone  printing. 
Often  two  or  more  of  the  materials  just  enumerated  are 
combined  to  secure  a  special  finish.  Satin  white  provides  a 
higher  finish  and  a  smoother  surface  than  either  clay  or 
blanc  fixe,  and  blanc  fixe  is  much  used  for  so-called  dull  finish 
coated  or  "mat"  papers — i.e.,  papers  which  have  a  smooth 
finish  but  little  gloss  or  "shine" ;  such  papers  are  lightly  cal- 
endered. The  use  of  starch  as  an  adhesive  prevents  the 
securing  of  a  glossy  finish.  By  its  application  a  low,  rather 
than  a  shiny,  finish  may  readily  be  secured,  but  starch  im- 
parts undue  absorbency.  so  that  half-tones  (especially  those 
printed  in  colours)  are  likely  to  be  dull.  Moisture  is  apt  to 
affect  injuriously  all  starch-sized  papers. 

The  Manufacture  of  Paper. — The  processes  of  manufac- 
ture are  somewhat  intricate.  They  have  for  their  object 
( 1 )  the  isolating  of  the  cellulose  fibres  and  the  freeing 
of  these  from  impurities;  (2)  the  forming  of  these  fibres, 
mixed  with  water  and  other  constituents  such  as  those  re- 
ferred to  above.  Into  a  web  or  sheet  of  paper;  and  (3)  the 
drying,  smoothing,  finishing,  and  cutting  of  this  paper. 

The  principal  machines  used,  after  the  fibres  have  been 
isolated,  are : 

1.  A  "beater,"  in  which  the  fibres  are  separated  from  one 
another  and  cut  to  even  lengths,  and  in  which  the  various 
constituents,  including  colouring  agents,  which  go  into  a  par- 
ticular lot  of  paper,  are  thoroughly  mixed,  or  "beaten"  to- 
gether, into  a  creamy  mass  of  the  proper  consistency.*  This 
mixture,  or  the  formula  for  it.  Is  called  the  "furnish." 

This,  of  course,  applies  only  to  uncoated  paper  and  to  the  "body  stock"  for 
coated  paper;  the  special  pigments  or  dyes,  the  casein,  the  coating,  etc., 
required  for  coated  paper  being  applied   later  in  the  coating  mill. 


122     PURCHASING  PRINCIPLES  AND  PRACTICES 

In  the  opinion  of  many,  it  is  in  the  beater  chiefly  that  the 
quality  of  the  paper  is  determined,  and  it  is  the  beating  which 
calls  for  the  most  experience  and  skill;  for  instance,  the  dura- 
tion of  the  beating  has  much  to  do  with  determining  the 
characteristics  which  the  paper  is  to  have. 

2.  The  Jordan,  or  refining  engine,  really  a  supplementary 
beater,  into  which  the  mixture,  now  called  the  "paper-stuff" 
or  simply  "stuff,"  passes  from  the  beater  itself.  This  is  a 
cone-shaped  machine — the  paper-stuff  is  made  more  homo- 
geneous, and  the  fibres  are  further  separated  and  some- 
what torn  or  bruised.  From  the  Jordan,  the  paper-stuff 
passes  to  a  "stuff-chest,"  and  then  to  the  "paper  machine," 

3.  The  "paper  machine"  chiefly  used  is  the  Fourdrinier, 
which  in  its  primitive  form  was  invented  by  Nicolas  Louis 
Robert,  of  France,  but  which  takes  its  name  from  Messrs. 
Henry  and  Sealy  Fourdrinier,  English  stationers,  who  further 
developed  it. 

The  most  distinctive  feature  of  this  machine  is  an  endless 
revolving  wire  screen  on  to  which  the  paper-stuff  flows,  and 
upon  which  the  paper  is  formed  in  a  continuous  sheet,  or  web, 
the  fibres  tending  to  arrange  themselves  lengthwise,  in  the  di- 
rection in  which  the  wire  is  moving,  thus  determining  the 
"grain"  of  the  paper. 

Deckle  Edges. — The  paper-stuff  is  confined  to  the  screen 
and  prevented  from  overflowing  by  an  adjustable  strap,  known 
as  the  "deckle  strap,"  at  each  side,  and  the  characteristic 
broken,  or  uneven,  edges  of  the  web  are  known  as  the  "deckle 
edges" ;  these  are  generally  trimmed  off  but  sometimes,  espe- 
cially if  it  is  desired  to  imitate  hand-made  paper,  they  are 
retained. 

An  ingenious  device  imparts  to  the  screen  a  shaking  or 
oscillating  motion,  which  causes  the  fibres  to  interlace  or  mat 
more  thoroughly  as  water  is  drawn  by  suction  through  the 
meshes  of  the  screen,  and  the  fibres  contract  and  curl  about 
one  another. 

From  this  wire  the  wet  web,'  now  fully  formed,  is  car- 
ried by  belts  to  a  series  of  heated  dryers,  felt-covered  rolls 

*  Just  before  leaving  the  wire  the  still  wet  paper  passes  under  a  small  roller 
covered  by  a  wire  screen,  and  known  as  the  "dandy  roll,"  by  which,  if  the 
paper  is  to  be  water-marked,  the  water  mark  is  imparted  by  the  pressure  of 
a  raised  design.  Sometimes  a  series  of  straight  parallel  lines  is  thus  impressed 
into  the  paper  as  water  marks.  Such  paper  is  known  as  "laid  paper,"  in 
distinction  from  the  ordinary  sheet,   which  is  called   "wove   paper". 


PAPER  123 

or  cylinders,  between  which  the  web  passes.  From  these 
rolls  the  web  is  generally  transferred  to  calenders,  vertical 
stacks  of  solid  or  hollow  steel  cylinders,  which  complete  the 
process  of  drying,  and  smooth  the  surface  of  the  paper.  Some 
papers  are  later  passed  through  a  long  series  of  additional 
calenders,  a  process  which  is  known  as  supercalendering  and 
which  imparts  a  high  finish  or  sheen  even  to  uncoated  papers. 
Of  the  rolls  or  cylinders  in  a  stack  of  calender  rolls,  only  one 
is  driven;  the  others  rotate  by  friction  and  it  is  this  friction 
which  gives  the  sheet,  traveling  at  high  speed  between  the  rolls, 
its  high  finish. 

In  drying  and  calendering,  it  Is  important  to  make  the 
two  sides  of  the  web  of  paper  uniform  in  appearance  and 
finish,  but  often  differences  are  very  noticeable;  the  side  which 
was  in  contact  with  the  wire  screen,  the  impress  of  which 
often  remains,  is  called  the  "wire  side,"  and  the  other  side, 
the  "felt  side." 

Delivery  in  Rolls  or  Sheets. — After  leaving  the  dryers  and 
calenders,  or  the  "dry  end"  of  the  paper  machine,  the  web  is 
wound  on  rolls  and  may  be  delivered  in  this  form  to  the 
customer  if  the  order  calls  for  such  rolls;  but,  if  the  order 
calls  for  sheets,  the  paper  is  cut  by  a  cutting-machine  into 
sheets  of  the  prescribed  size,   or  into  stock  sizes." 

Even  when  the  paper  is  to  be  delivered  in  rolls,  the  width 
of  the  rolls  required  is  likely  to  differ  from  that  of  the  web; 
the  web  is  therefore  slit  on  the  machine  to  the  desired 
width,  and  the  paper  then  wound  in  two  or  more  sets  of  rolls. 
If  the  combined  widths  of  rolls  ordered  by  one,  or  by  different 
customers,  equals  or  nearly  equals  the  width  of  the  machine, 
the  machine  is  said  to  have  a  "good  fill."  The  widths  of 
different  machines  vary  widely,  some  machines  being  as  wide 
as  200  inches;  and  the  speed  at  which  the  endless  wire  screen 
moves  may  vary  from  200  ft.  or  less  to  1,000  ft.,  or  even 
more,  a  minute.  As  a  rule,  the  slower  the  speed  the  better 
the   "formation"   of  the  paper. 

•  Finer  writing  and  ledger  papers  are  often  cut  into  sheets  before  being 
"tub-sized,"  and  are  then  dried  on  racks  in  a  special  drying  room.  These 
papers  are  said  to  be  "loft-dried."  Instead  of  being  smoothed  and  finished 
by  calenders,  they  are  placed  between  plates  of  metal,  and  subjected  to  great 
pressure.  These  papers  are  said  to  be  "plate-finished."  "Linen"  finish  is 
imparted  by  plac'ng  pieces  of  linen  between  the  metal  plates  and  the  paper, 
which  thus  receives  the  impress  of  the  linen.  "Linen  papers,"  therefore,  are 
not  necessarily  made  of  linen   rag,  or  even  of  rag. 


124     PURCHASING  PRINCIPLES  AND  PRACTICES 

Other  Machine  Types. — Paper  machines — other  than  the 
Fourdrinier — commonly  used  are  the'  Harper  machine,  which 
is  really  a  modification  of  the  Fourdrinier  and  is  used  for  man- 
ufacturing thin,  light  papers;  and  the  cylinder  machine,  which 
operates  on  a  different  principle,  the  wire  screen  being  on  a 
revolving  cylinder,  the  lower  part  of  which  passes  through  a 
vat  of  paper-stuff,  upon  which  the  paper  forms  much  as  it 
does  on  the  wire  screen  of  the  Fourdrinier  machine.  The  film 
of  paper  is  then  transferred  to  a  felt  which  carries  it  to  the 
drying  rolls  and  calenders. 

A  smgle-cylinder  machine  is  used  for  the  manufacture  of 
tissues;  a  double  or  multiple-cylinder  machine  chiefly  for  the 
manufacture  of  boards,  the  thin  sheets  from  the  different 
cylinders  being  automatically  pressed  together  to  form  a  sin- 
gle thickness. 

The  coating  of  papers  is  a  separate  process  and  is 
often  performed  in  separate  coating  mills.  After  the  coating 
is  applied  and  brushed  evenly,  and  the  paper  is  dried,  the 
web  passes  through  a  series  of  supercalenders,  where  it  is 
highly  polished. 

Many  Papers  Short-Lived. — Much  of  the  modern  paper 
made  by  these  modern  processes  is  subject  to  comparatively 
rapid  deterioration  and  decay.  For  instance,  the  addition  of 
an  excess  of  sizing  and  of  loading,  and  the  excessive  heating 
and  compression  which  often  occur  in  drying,  particularly  in 
calendering,  weaken  the  paper  and  make  it  relatively  short- 
lived.    Coated  papers  are  especially  subject  to  deterioration.' 

Principal  Classes  of  Paper, — A  complete  list  of  the  differ- 
ent kinds  of  paper  and  of  the  uses  to  which  they  may  be  put 
would  fill  several  pages.  For  convenience,  however,  paper 
may  be  broadly  grouped  into  the  following  classes :  ( 1 ) 
newsprint,  (2)  book  papers,  (3)  writing  and  ledger  papers, 
(4)  cover  papers,  (5)  tissue  papers,  (6)  glassine  and  grease- 
proof papers,  (7)  blue  print  papers,  (8)  glazed  and  fancy 
papers,  (9)  wrapping  papers,  (10)  vegetable  parchment, 
(11)  blotting  paper,  (12)  filter  paper,  (13)  wall  paper, 
(14)    safety  papers,    (15)    board,   including  cardboard,  box- 

'  See  a  pamphlet  by  F.  P.  Veitch,  "Durability  and  Economy  in  Papers  for 
Permanent  Records"  (Report  No.  89  of  the  U.  S.  Department  of  Agriculture, 
1909)  ;  The  report  of  a  committee  of  the  Society  of  Arts  on  the  "Duration  of 
Paper,"  London,  1898;  and  Chapter  XII  in  Sindall's  "Manufacture  of  Paper," 
London,   1908. 


PAPER  125 

board,  chipboard,  pasted  chipboard,  bindersboard,  and  corru- 
gated board,  (16)  roofing  and  building  papers,  and  (17)  a 
miscellaneous  group,  in  which  would  fall  the  paper  material 
used  in  manufacturing  articles  ranging  all  the  way  from 
wheels  for  railway  cars,  to  a  fabric  which  closely  resembles 
cotton  cloth,  and  has  been  used  successfully  for  men's 
clothing. 

Numerous  Subdivisions. — Eacn  one  or  tnesc  groups  is 
again  subdivided.  Of  newsprint,  for  instance,  we  have 
standard  news,  catalogue  news,  and  half-tone  news;  and  of 
book  papers,  opacity,  India,  machine  finish  (or  M.  F.), 
English  finish  (or  E.  F. ),  sized  and  supercalendered  (or 
S.  and  S.  C),  antique,  eggshell,  offset,  coated  or  enameled 
(called  "art  paper"  in  England),  imitation  coated,  and 
cover  paper.* 

Moreover,  papers  in  each  general  group,  and  sometimes 
those  in  different  subdivisions  of  the  same  group,  are  sold  on 
a  distinctive  basis  of  weight  and  size;  and  "trade  customs" 
which  apply  to  one  group  or  subdivision  may  not,  and  often 
do  not,  apply  to  the  others. 

Simplification  Needed. — To  the  novice  all  of  this  is  be- 
wildering and  confusing.  Many  of  the  confusing  elements 
seem  to  be  needless  and  unintelligent;  they  appear  to  be 
largely  survivals,  through  inertia,  of  traditions  and  customs; 
and  the  need  of  simplification  and  reform  is  patent. 

Meanwhile,  it  is  necessary  that  the  buyer  should  constantly 
bear  in  mind,  among  other  things,  the  basic  sizes  and  weights 
in  which  different  kinds  of  paper  are  now  sold.  Among  the 
basic  sizes  are : 

Book  paper,  500  sheets  to  the  ream    25       x  38 

Newsprint,  onion  skin,  and  vegetable  parchment, 

500  sheets  to  the  ream   24       x  36 

Wrapping,   waxed    and   tissue    paper, 

480    sheets    to    the    ream     24       x  36 

Writing,    railroad    manila    and    envelope    paper, 

500  sheets  to  the  ream   17       x  22 

Cover,  500  sheets  to  the  ream   {    ^-,,       ^„^, 

(.    22Y2  X  28  54 

Blotting,    500    sheets   to   the    ream    19       x  24 

*  No  attempt  to  define  all  these  subdivisions  is  made  here,  because  definitions 
are  of  little  value.  A  novice  should  obtain  samples  of  each  kind,  and  thus 
learn  to  identify  them  and  become  thoroughly  familiar  v.'ith  the  distinctive 
characteristics  of  each.  Some  papers  may  belong  to  two  of  the  classes  mentioned 
above;  thus  an  "opaque"  or  "opacity"  paper  may  be  an  M.  F.,  an  S.  and  S.  C. 
or  an  E.  F.  paper. 


126     PURCHASING  PRINCIPLES  AND  PRACTICES 

Mill  Bristols  and  cardboard," 

500    sheets    to   the    ream    22^  x  28J^ 

Index  Bristols,   500  sheets  to  the  ream   25^  x  303^ 

Coated  folding  boxboards  '" 28       x  44 

Bindersboard    (bundles   of   50    lb.    each,    the    "number"   of 
the  board  being  the  number  of  sheets  of  the  basic  size 

in   a   50   lb.   bundle.)    26       x  38 

Ordinary  glazed,  500  sheets  to  the  ream 20       x  24 

Extra  fine  glazed,  500  sheets  to  the  ream   20       x  25 

For  different  groups  different  "substance  numbers"  have 
been  adopted  in  America,  these  substance  numbers  being 
certain  standard  weights  for  500  sheets  in  a  basic  size.  For 
instance,  the  substance  numbers  for  book  paper  are  the  stand- 
ard weights  of  500  sheets  measuring  25  x  38,  other  stock 
sizes  being  customarily  made  in  weights  equivalent  to  these 
substance  weights.  For  convenience,  the  customary  substance 
numbers  and  stock  sizes  for  book  paper,  for  writing  paper, 
and  for  cover  paper,  are  given  herewith: 

BOOK   PAPERS,    COATED   AND    UNCOATED 


Size 

Weighl 

25  X  38 

30 

35 

40 

45 

50 

60 

70 

80 

90'" 

100 

120" 

22  X  32 

22 

26 

293^ 

zvA 

37 

4434 

52 

5934 

663^ 

74 

89 

24  X  36 

271/2 

32 

361^ 

41 

45 1/^ 

54H 

63^ 

73 

82 

91 

109 

25  X  38 

30 

35 

40 

45 

50 

60 

70 

80 

90 

100 

120 

2e     X  29 

24 

28 

31J^ 

351^ 

39^ 

47H 

553^ 

63^ 

71^ 

793^ 

95 

26  X  40 

33 

38^ 

44 

49^ 

543^ 

65^ 

763^ 

87^ 

983^ 

109/2 

1311/4 

28  X  42 

37 

43^ 

49>1 

553^ 

62 

7434 

8634 

99 

11134 

124 

148/ 

28  X  44 

39 

451^ 

52 

5834 

65 

78 

91 

103^ 

1163^ 

12934 

15534 

29  X  52 

48 

56 

63 

71 

79 

95 

111 

127 

143 

159 

190 

301/^x  41 

391/1 

46 

521^ 

59 

66 

79 

92 

105^ 

mVi 

131^4 

158 

32  X  44 

44 

52 

59 

67 

74 

89 

104 

119 

133 

148 

178 

33  X  46 

48 

56 

64 

72 

80 

96 

112 

128 

144 

160 

1913/2 

34  X  44 

47 

55 

63 

71 

78^ 

941/4 

11034 

126 

14134 

15734 

189 

35  X  45 

4914 

58 

661/' 

i^'A 

83 

993/ 

116 

13234 

149 

166 

199 

36  X  48 

55 

64 

73 

82 

91 

109 

127 

146 

164 

182 

218 

38  X  50 

60 

70 

80 

90 

100 

120 

140 

160 

180 

200 

240 

41  X  61 

79 

92 

105 

118 

132 

158 

184 

211 

237 

263 

316 

42  X  56 

74 

87 

99 

111 

124 

149 

173 

198 

223 

248 

297 

44  X  56 

78 

91 

104 

117 

130 

156 

182 

207 

233 

259 

311 

44  X  64 

88 

104 

118 

134 

148 

178 

208 

238 

266 

299 

356 

"Cardboards  and  boxboards  are  figured  by  standard  thickness;  for  plain 
cardboard,  for  instance,  these  range  from  2-ply=.012  points  to  14-ply=.048 
points;    and   for   boxboards   the   standard   is   .016. 


These  apply  to  coated  papers  only. 


PAPER 

WRITING  PAPERS 


127 


Size 


Substance  IVeight  in  Pounds,  Basis  17x22 


13 

16 

26? 

24 

28 

32 

36 

40 

Lbs. 

Lbs. 

Lbs. 

Lbs. 

Lbs. 

Lbs. 

Lbs. 

Lbs. 

ny^ 

uy 

18 

2\y 

25 

2%y 

32K 

36 

23 

29 

36 

43 

50 

57 

65 

72 

13 

16 

20 

24 

28 

32 

36 

40 

ley 

2oy 

25K 

3Qy 

35y 

40K 

46 

51 

uy 

17  y 

22 

2sy 

31 

35;^ 

40 

44K 

29 

35 

44 

53 

62 

71 

80 

89 

16 

\9y 

24y 

29y 

34 

39 

44 

49 

17 

21 

26K 

3\y 

37 

42K 

47^ 

53 

i9y 

24 

30 

36 

42 

48 

54 

60 

23 

29 

36 

43 

50 

57 

65 

72 

i9y 

24 

30 

36 

42 

48 

54 

60 

26 

32 

40 

48 

56 

64 

72 

80 

17  y 

21^ 

27 

32y 

38 

^3y 

49 

54 

19 

23y 

29>^ 

3sy 

41>^ 

47 

53 

59 

22 

27y 

34y 

41 

48 

55 

6iy 

(Ay 

26y 

32y 

41 

49 

57 

65K 

73  y 

82 

11 

33 

41 

50 

58 

66K 

7\y 

83 

\9y 

24 

30 

36 

42 

48 

54 

60K 

29 

35 

44 

53 

62 

71 

80 

89 

32 

39 

49 

59 

68 

78 

88 

98 

21 

2sy 

32 

3sy 

45 

s\y 

58 

64 

24 

30 

37 

45 

52 

S9y 

67 

74K 

2iy 

30K 

38 

isy 

53 

61 

(Ay 

76 

32y 

40K 

50>^ 

61 

7oy 

soy 

90 

101 

39 

48 

60 

72 

84 

96 

108 

120 

33 

41 

51 

61 

71 

81 

92 

102 

52 

64 

80 

96 

112 

128 

144 

160 

44 
Us. 


16  x21.. 

16  x42.. 

17  x22.. 

17  x28.. 

18  x23.. 

18  x46. . 

19  x24. . 

19  x26. . 

20  x28.. 

21  x32.. 

22  x25K 

22  x34.. 

22yyaiy 

22Kx24K 
22Kx28K 
22^x34.  . 
22yy.3\y 

23  x24K 

23  x36.  . 

24  x38.. 
24Kx24>^ 

i\yyi%y 

24^x29.  . 

24Kx38K 
25^x44.  . 
28  x34.. 
34    x44.. 


39>^ 
79 
44 
56 

48K 

97 

53>^ 

58 

66 

79 

66 

88 

59K 

65 

75^ 

90 

9\y 

66y 
97 
107 

7oy 

82 

83>^ 
111 
132 
112 
176 


COVER    PAPERS 
20x26—25.        35,     50,    65,    80,    90 

23x33— 36K,  51,  73,  95,  117,  131 
26x40—50,  70,  100,  130,  160,  180 
33x46—73.       102,  146,  190,  234,  262 

Proposed  American  Decimal  Standard. — Various  sugges- 
tions for  the  reform  of  the  present  chaotic  conditions  have  been 
made.  Of  these  the  most  promising  is  that  makers,  sellers, 
and  buyers  of  paper  adopt  a  common  standard  known  as  the 
American  Decimal  Standard,  proposed  by  Mr.  Thomas  E. 
Donnelley,  while  director  of  the  Pulp  and  Paper  Division  of 
the  United  States  War  Industries  Board.  This  system  was 
described  by  Mr.  Donnelley  in  a  Government  report,  as  fol- 
lows : 


128     PURCHASING  PRINCIPLES  AND  PRACTICES 

The  ream  is  entirely  eliminated,  everything  being  figured  by  the  thousand 
sheets.  The  standard  of  size  is  1,000  sheets  of  paper  one  inch  square,  and 
the  number  of  thousandths  of  a  pound  such  1,000  sheets  weigh,  is  the  substance 
number  of  any  particular  piece  of  paper.  For  example,  a  paper  of  No.  125 
substance  would  mean  that  1,000  sheets  of  that  paper,  one  inch  square  would 
weigh  .125  pounds,  and  if  we  should  desire  to  find  the  weight  per  1,000  sheets 
of  any  given  size,  as  25x38,  we  would  first  multiply  25x38=950  to  find  the 
number  of  square  inches  in  the  sheet. 

If  1,000  sheets  one  inch  square  weighed  .125  pounds,  then  1,000  sheets,  950 
square  inches,  would  weigh  950  times  .125  pounds,  or  118.75  pounds.  Should 
we  desire  to  find  the  weight  of  a  sheet  size  42x61,  we  would  multiply  42x61  = 
2562  square  inches,  by  .125,  equaling  320.25  pounds,  or  eliminating  decimals, 
320  pounds  per  thousand  sheets. 

The  same  substance  number  would  designate  the  equivalent  weight,  whether 
it  were  book  paper,  cover  paper,  writing,  or  manila.  As  stock  weights  would 
most  probably  be  even  substance  numbers,  such  as  70,  80,  90,  100,  120,  140,  etc.j 
the  weight  of  any  odd  size  would  readily  be  found  by  the  simplest  multiplica- 
tion, and  there  would  be  no  confusion  in  the  mind  of  the  customer  because, 
first:  The  system  is  readily  explained  and  easily  understood;  second:  There 
is  but  one  substance  number  for  the  same  weight  of  stock  for  all  classes;  and, 
third:  There  would  be  no  confusion  between  the  substance  number  and  the 
actual  weight  of  the  stock,  as  the  substance  number  is  a  basis  unit  and  not 
the  weight  in    pounds   of  some   stock   size   as   a   standard. 

Approved  by  Printers  and  Buyers. — This  American  Deci- 
mal Standard  has  already  received  the  official  approval  of 
the  following  organizations:  The  United  Typothetas,  the 
Label  Manufacturers'  National  Association,  and  the  Na- 
tional Association  of  Employing  Lithographers;  and  it  is 
to  be  hoped  that  eventually  it  will  be  adopted  universally. 

A  somewhat  similar  standard  has  been  recommended  by 
the  Federation  of  Master  Printers  in  England,  the  500-sheet 
"ream"  to  be  superseded  by  the  1,000-sheet  "mille." 

Mill  Brands  and  Merchants'  Brands. — Another  cause  of 
bewilderment  and  confusion  is  the  multitude  of  so-called  mill 
brands  and  merchants'  brands.  By  mill  brands  is  meant  cer- 
tain papers  made  by  a  particular  mill  as  its  "standard  pa- 
pers," and  sold  under  names  chosen  by  the  mill.  These  mill 
brands  are  advertized  extensively,  and  it  is  comparatively 
easy  to  identify  and  become  familiar  with  the  principal  ones. 

Merchants'  brands,  however,  are  innumerable.  A  paper 
merchant  may  arrange  with  a  mill  to  manufacture  a  paper 
having  a  certain  appearance  and  certain  characteristics,  and 
may  sell  this  paper  under  a  name  selected  by  himself.  This 
brand  may  not  be  made  regularly  by  the  same  mill;  in  fact, 
different  lots  of  the  same  brand  may  be  made  by  different 
mills.      It   is    conceivable,    also,    that   substantially   the    same 


PAPER  129 

paper  from  the  same  mill  may  be  offered  to  the  buyer  under 
different  names,  and  perhaps  at  different  prices,  by  different 
merchants. 

Lack  of  Uniformity. — In  general,  therefore,  it  follows  that 
merchants'  brands  cannot  always  be  depended  upon  to  have 
the  uniformity  and  the  consistent  individuality  of  mill  brands, 
although  different  lots  of  these,  too,  may  and  will  vary.  For 
an  enumeration  of  current  brands,  many  pages  would 
be  required." 

Selecting,  Ordering  and  Inspecting  Paper. — The  import- 
ance of  judicious  selection  should  be  sufficiently  obvious,  but 
it  is  safe  to  say  that  a  large  part  of  the  paper  bought  annually 
is  not  bought  as  judiciously  as  it  should  be.  The  buyer  of 
paper  should  never  forget  that  it  is  his  function,  first  of  all, 
to  buy  for  a  given  purpose  a  paper  which  will  best  serve  that 
purpose;  and  that  the  price  at  which  he  buys,  though  very 
important  and  often  vital,  is  really  secondary. 

The  buyer  of  book  paper  will  probably  belong  to  one  of 
three  classes:  (1)  a  publisher,  or  other  customer  of  a  printer; 
(2)  an  advertising  or  other  agency,  acting  as  a  medium  be- 
tween such  a  customer  and  a  printer;  (3)  the  printer  himself. 

As  regards  the  first  two  classes,  it  should  be  unnecessary  to 
lay  stress  upon  the  importance  of  consulting  the  printer  in 
advance,  and  getting  the  benefit  of  his  advice  and  judgment. 

The  buyer  for  the  printer,  in  turn,  should  have  the  advice 
and  assistance  of  the  pressroom,  of  the  ink  chemist,  and  of 
the  engraver;  he  should  also  be  familiar  offhand  with 
the  "past  performances"  of  different  mill  or  merchants' 
brands.  He  should  see  that  the  paper  selected  is  one  on  which 
half  tones  or  other  illustrations  chosen  for  the  job  in  question 
will  print  to  good  advantage." 

Testing  the  Samples. — It  will  be  advisable,  also,  to 
apply  to  the  samples  submitted  by  sellers  such  of  the  tests 
hereafter  described  as  may  have  special  significance  in  deter- 
mining which  of  these  samples  excel  in  the  qualities  especially 

"A  convenient  summary  may  be  found  in  Lockvvood's  "Directory"  (annual), 
and  in  the  annual  "Paper  Record"  issued  by  Walden  Sons  &  Mott,  New  York 
City. 

"In  general  it  may  be  said  that  machine-finish  paper  will  take  lOO-screen, 
and  sometimes  as  high  as  120-screen  half-tones;  a  supercalendered,  English 
finish,  or  dull  coated  paper,  133-screen  half  tones;  a  good  coated  paper,  ISO- 
screen   half-tones;    and    a    double    coated    paper,    200-screen    halftones. 


130     PURCHASING  PRINCIPLES  AND  PRACTICES 

desired  for  the  job  for  which  the  paper  is  being  bought. 
Above  all,  the  fitness  of  a  paper  for  any  job  should  be 
tested  by  subjecting  this  paper  wherever  possible  to  an 
actual  trial;  by  running  sheets  through  a  press,  by  proving 
them  with  different  inks,  by  folding  them,  and  by  binding 
them  into  a  dummy. 

"Word  Orders  Carefully. — After  the  paper  has  been  se- 
lected, great  care  should  be  taken  in  wording  the  order  so 
that  there  shall  be  no  chance  for  controversy  or  misunder- 
standing later.  Each  order  should  specify  accurately  the 
quantity  required,  the  exact  dimensions  of  the  sheet  or  roll 
to  be  supplied,  and  either  the  exact  ream  weight  in  these 
dimensions,   or  the  exact  basic  weight. 

The  colour,  finish,  and  formation  are  usually  best  indicated 
by  a  sample,  one  half  of  which  should  be  given  to  the  seller, 
and  the  other  half  attached  to  the  buyer's  file  copy 
of  the  order.  Any  special  understanding  with  regard 
to  the  materials  to  be  used  in  making  the  paper  should  be 
specified  explicitly  in  the  order  itself;  and  the  price  should  be 
so  stated  as  to  leave  no  doubt  as  to  whether  the  freight  and 
cartage  are  to  be  paid  by  the  seller  or  by  the  buyer. 

Direction  of  the  Grain  Important. — It  is  generally  essen- 
tial also  that  the  direction  of  the  grain  in  sheets  ordered 
should  be  specified.  This  is  usually  done  by  underscoring  the 
dimension  in  the  direction  in  which  the  grain  is  to  run; 
sometimes  by  adding  after  the  specification  for  dimensions 
the  words  "cross  grain"  or  "straight  grain,"  the  former 
meaning  that  the  grain  is  to  run  the  short  way  of  the  sheet, 
and  the  latter  that  the  grain  is  to  run  the  long  way.  In  gen- 
eral, the  grain  should  so  run  in  a  sheet  that,  in  a  bound  book, 
it  will  be  parallel  with  the  backbone;  otherwise,  the  book  will 
not  open  properly  (especially  when  flexibility  is  desirable), 
and  if  the  pages  are  subjected  to  moisture  (e.  g.,  when  glue 
or  paste  is  applied  to  the  cover  in  binding),  the  paper  is  likely 
to  "cockle." 

In  the  case  of  very  light  weight  papers,  such  as  India,  it  is 
not  so  essential  that  the  grain  in  a  bound  book  shall  run  par- 
allel with  the  backbone.  In  fact,  it  may  even  be  desirable  that 
the  grain  should  run  at  right  angles  to  the  backbone,  so  as  to 
give  greater  firmness  and  rigidity  to  the  book,  if  these  quali- 
ties should  be  desired;  and  the  sewing  or  stitching  is  likely 
to  hold  better.     In  cases  in  which  the  folding  quality  is  im- 


PAPER  131 

portant,  the  grain  should  run  in  the  direction  of  the  fold,  as 
any  paper  is  more  likely  to  break  when  folded  against,  than 
when  folded  with,  the  grain. 

Place  Your  Order  Early. — Whenever  possible,  the  buyer 
should  issue  his  order  early  enough  to  enable  the  manu- 
facturer to  make  and  dehver  the  paper  at  least  a  short 
time  in  advance  of  the  date  when  it  is  to  be  used.  This  will 
provide  an  opportunity  for  seasoning,  and  often  expensive 
and  exasperating  delays  in  the  pressroom,  caused  by  the  ex- 
pansion or  shrinkage  of  paper,  can  thus  be  prevented. 

It  is  to  be  remembered  that  cellulose  is  highly  hygroscopic 
— that  is,  has  a  strong  affinity  for  water.  Dry  paper,  there- 
fore, which  is  stored  in  a  humid  atmosphere  absorbs  moisture; 
this  causes  the  fibres  to  expand,  and  a  sheet  of  paper  to  stretch, 
chiefly  across  the  grain,  as  a  dry  fibre  when  immersed  in 
water  will  increase  as  much  as  20  per  cent,  to  30  per  cent,  in 
diameter,  though  its  length  may  be  increased  by  only  about 
one-tenth  of  one  per  cent. 

Properly  Packed  Paper. — Further,  the  buyer  should  see  to 
it  that  all  paper  Is  properly  packed.  With  regard  to  this,  the 
Paper  Committee  of  the  National  Association  of  Purchasing 
Agents  has  made  the  following  recommendations : 

Rolls. — All  rolls,  not  crated  or  cased,  should  be  protected  on  edges  by  fibroid 
or  heavy  board  collars,  covered  by  a  cap  of  strong,  heavy  paper.  Book  papers 
of  all  descriptions,  bonds,  ledger  and  blue  print  paper,  in  rolls,  should  have 
a  waterproof  wrapper  in  addition  to  collar  and  cap.  Fancy  box  covering 
papers,  easily  injured,  should  be  packed   in   waterproof   lined  cases. 

Flat. — All  papers  for  printing  or  lithographing  should  be  packed  flat  in 
frames  or  cases.  If  for  register  colour  printing,  they  should  be  packed  in  cases 
with  good  waterproof  lining.  Coarse  papers  for  wrapping  may  be  packed 
in  lapped  bundles;  tags,  cheap  bristols  and  similar  board  not  intended  for 
unusual  printing  may  be  packed  in  bundles,  with  cardboard  protectors  on 
edges,   and  well  wrapped. 

The  following  papers,  whether  for  printing  or  other  use,  such  as  glassine, 
coated  glazed,  embossed,  flint  papers  and  box  coverings,  cover  paper,  bond 
writings,  weddings,  ledgers,  gummed,  tracing,  and  other  thin  papers,  Bristols 
and  coated  boards  should  be  packed  in  waterproof  lined  cases.  A  sheet  of  chip 
or  news  board  at  the  bottom,  and  on  top  of  paper,  is  an  additional  and 
almost   necessary   protection. 

Additional  Precautions. — It  will  be  noticed  that  nothing  is 
said  in  these  recommendations  with  regard  to  the  packing  of 
book  papers  In  lapped  bundles,  but  If  such  bundles  are 
made  up  properly  and  are  carefully  protected — especially 
their  ends — the  cheaper  grades  of  paper  can  be  shipped  In  this 
manner  with  a  fair  degree  of  safety. 


132     PURCHASING  PRINCIPLES  AND  PRACTICES 

All  packing  cases  containing  sheets  of  paper  should  con- 
tinuously be  kept  flat — both  in  transit  and  in  storage;  other- 
wise, there  is  serious  risk  of  crumpling.  Paper  received  in 
soft  fold  bundles  should  be  unpacked  as  soon  as  received 
and  should  be  promptly  piled  in  the  storeroom  or  pressroom. 

Points  for  the  Inspector. — Each  lot  of  paper  should  be 
carefully  inspected  as  soon  as  possible  after  its  delivery,  and 
as  long  as  possible  before  it  is  printed.  The  inspector  should 
determine  whether  sheets  have  been  cut  to  the  correct  size, 
and  whether  the  cutting  has  been  done  evenly;  whether  the 
weight  is  in  conformity  with  the  order  (within  the  limits  at 
least  fixed  by  trade  customs)  ;  whether  the  grain  runs  in  the 
direction  specified;  whether  the  finish  and  colour  are  uniform, 
not  only  as  between  different  sheets,  but  as  between  the  differ- 
ent sides  of  the  same  sheet;  and,  in  the  case  of  coated  papers, 
whether  the  coating  is  uniform  and  adheres  properly  to  the 
body  of  the  sheet. 

For  reasons  previously  suggested,  it  seems  as  yet  imprac- 
ticable for  the  average  buyer,  even  of  large  quantities  of 
paper,  to  buy  by  exact  scientific  specifications.  The  United 
States  Government,  however,  has  been  a  pioneer  in  buying  its 
paper  in  this  manner,  and  the  experiment  seems  to  have 
worked  successfully.  It  is  to  be  noted  that  such  all-im- 
portant qualities  as  colour,  finish,  and  formation  are  specified 
as  yet,   even  by  the   Government,   by  sample   only. 

The  Testing  of  Paper/' — Anyone  who  buys  paper  in  any 
quantity  should  have  at  least  a  ream  scale,  by  which  he  can 
readily  determine  from  one  sheet,  or  a  part  of  a  sheet,  the 
weight  of  500  sheets  of  a  given  size,  a  Mullen  or  Ashcroft 
tester  to  determine  bursting  strength,  a  micrometer  and 
a  bulk  tester.  Also  every  buyer  should  have  at  hand  a  small 
bottle  of  phloroglucine  (i.e.,  phloroglucinol  dissolved  in 
hydrochloric  acid)  or  of  nitric  acid,  by  which  he  can  de- 
tect at  once  the  presence,  in  any  sheet,  of  ground  wood. 
If  ground  wood  is  present,  a  drop  of  nitric  acid  will  turn  the 
paper  brown,  and  a  drop  of  phloroglucine  will  turn  the  paper 

"The  methods  of  testing  are  fully  described  in  several  books  referred 
to  at  the  end  of  this  chapter,  and  more  specifically,  in  a  pamphlet  entitled 
"Paper  Testing  Methods,"  published  in  1920  by  the  Technical  Association 
of  the  Pulp  and  Paper  Industry,  and  in  Circular  No.  107  entitled  "The  Testing 
of  Paper,"   issued   by  the  Bureau  of  Standards,   Washington. 


PAPER  133 

rose-pink  or  magenta."  Papers  which  contain  no  ground 
wood  are  commonly  designated  as  "free  papers"  or  "free 
sheets."  The  presence  of  starch  can  readily  be  detected  by 
applying  to  the  paper  a  dilute  solution  of  iodine,  which,  if 
starch  is  present,  will  cause  a  blue-black  stain.  The  relative 
weight  of  the  loading  can  be  determined  by  weighing  a  piece 
of  paper,  burning  it,  and  then  weighing  the  ash — which  will 
represent  fairly  accurately  the  original  loading. 

Testing  for  Grain  Direction. — The  direction  of  the  grain 
can  usually  be  determined  by  folding  or  tearing  a  sheet  in 
each  direction,  as  the  folded  edge  against  the  grain  is  more 
likely  to  crack,  and  the  torn  edge  is  likely  to  be  more  fibrous, 
than  in  the  direction  of  the  grain.  Another  method,  effec- 
tive for  sized  papers  only,  is  to  moisten  one  side  of  a  small 
piece,  cut  square,  whereupon  the  paper  will  curl,  and  the 
grain  will  lie  in  the  direction  of  the  curl. 

A  third  method  is  to  hold  together  vertically,  and  then  in- 
cline from  side  to  side,  two  narrow  strips  cut  from  the  same 
sheet;  the  first  cut  in  one  direction,  the  second  in  the  other 
direction.  The  strip  which  falls  away  from  the  other  by  its 
own  weight  will  be  the  one  in  which  the  grain  is  crosswise 
instead  of  lengthwise,  as  paper  is  more  flexible  against  the 
grain  than  with  the  grain. 

Other  Tests. — The  wire  side  of  a  sheet  may  be  distinguished 
from  the  felt  side  by  immersing  a  sample  in  water  and  then 
draining  off  the  excess,  whereupon  the  wire  marks  will  be 
apparent  on  the  wire  side. 

A  simple  method  of  testing  the  relative  opacity  of  two 
sheets  is  to  place  samples  of  these  sheets  side  by  side  over  a 
printed  page,  and  then  note  through  which  one  the  type  shows 
more  plainly.  A  more  accurate  method  is  to  cut  a  small 
slit  in  a  piece  of  cardboard,  place  this  cardboard  between 
the  eye  and  some  bright  light,  and  determine  how  many 
sheets,  or  just  what  thickness,  of  each  of  the  papers  under 
comparison,  will,  when  placed  over  the  slit,  wholly  obliterate 
the  light. 

"  If  phloroglucine  is  applied  to  a  paper  which  has  been  coloured  with  certain 
aniline  dyes  (e.g.,  mttanil  yellow),  the  paper  will  turn  pink,  even  if  no  ground 
wood  is  present;  but  this  reaction  is  almost  instantaneous,  and  the  colour  is 
even,  whereas  ground  wood  colours  somewhat  slowly  and  not  uniformly.  The 
phloroglucine  solution  should  be  kept  in  a  dark  place  as  its  staining  prop- 
erties   are    affected    by   light. 


134     PURCHASING  PRINCIPLES  AND  PRACTICES 

The  folding  quality  can  be  tested  roughly  by  making  two 
intersecting  folds  at  right  angles  to  one  another,  and  then 
reversing  the  sheet  and  making  the  same  folds  in  the  opposite 
direction.  At  the  point  of  intersection  a  poor-folding  paper 
will  break  noticeably. 

The  Tests  for  Strength. — Relative  tearing  strength  can  be 
gauged  by  tearing  with  the  fingers,  but  each  sheet  should  be 
torn  both  with  the  grain  and  against  the  grain,  as  a  sheet 
always  tears  more  easily  with  the  grain  than  against  it.  The 
familiar  Mullen  test  will  measure  numerically  the  bursting 
strength  of  a  sheet,  but  the  significance  and  value  of  this 
test  are  often  misunderstood  and  overestimated;  any  sheet 
should  always  be  tested  in  several  different  places,  and  an 
average  result  arrived  at. 

Paper  Finish  and  Coating. — Some  idea  of  the  relative  fin- 
ish of  two  coated  papers  can  be  gained  by  looking  against  the 
light  along  the  surface  of  each  and  by  examining  each 
under  a  strong  magnifying  glass.  To  test  uniformity  of 
finish,  rub  powdered  graphite  (e.g.,  from  a  lead  pencil)  over 
the  surface  and  see  whether  the  resulting  smudge  is  uniform, 
or  mottled  and  "spotty."  To  determine  whether  the  coating 
adheres  properly  to  the  body  of  the  stock,  heat  one  end  of  a 
stick  of  sealing  wax,  apply  this  to  the  surface  and  when  it 
cools  remove  it;  It  will  withdraw  only  the  coating  from  a 
poorly  coated  sheet,  but  will  withdraw  both  the  coating  and 
some  or  all  of  the  underlying  "body  stock"  from  a  well- 
coated  sheet. 

Another,  but  less  satisfactory,  test  is  to  crumple  a  small 
piece  of  the  paper  in  the  hand  and  note  whether  the  coating 
drops  off  readily;  and  a  third  test  Is  to  moisten  the  thumb, 
press  it  hard  on  the  paper,  and  see  whether  the  coating  mate- 
rial sticks  to  the  thumb.  If  the  coating  does  not  adhere  firmly 
to  the  body  stock,  trouble  in  printing  Is  probable  through  the 
picking  or  flaking  of  the  coating  material. 

Formation  of  a  Sheet. — The  so-called  "formation"  of  a 
sheet  is  always  significant.  This  is  easily  judged  by  looking 
through  the  sheet  against  a  strong  light.  If  the  texture  is  uni- 
form, the  formation  is  said  to  be  even;  if  it  is  wavy — that  is, 
if  it  appears  mottled  and  patches  of  fibre  are  evident — the 
formation  Is  said  to  be  "wild."  A  wild  formation  is  usually 
evidence  of  unskillful  manufacture,  but  it  should  be  borne  in 
mind  that  it  Is  easier  to  attain  evenness  if  fibres  are  short; 


PAPER  135 

and  other  things  being  equal,  long  hbres  give  greater  tearing 
strength,  and  a  better  folding  quality. 

All  of  these  tests  can  easily  be  applied  without  expensive 
apparatus.  In  special  cases,  however,  more  elaborate  tests 
are  often  desirable.  These  can  best  be  obtained  from  an  out- 
side laboratory,  as  few  companies  would  find  it  profitable  to 
maintain  a  special  laboratory  for  this  purpose.  Such  tests 
may  be  grouped  broadly  into  three  classes:  physical,  chemical, 
and  microscopical.  The  physical  tests  include  accurate  numer- 
ical measurements  of  tensile  strength  and  of  folding  strength, 
for  which  such  instruments  as  the  Schopper  tensile  machine 
and  the  Schopper  folding  machine  are  frequently  used;  for 
measuring  tearing  strength  there  has  not  yet  been  devised  any 
perfect  instrument,  but  that  known  as  the  Elmendorf  tearing 
tester  is  widely  used;  colour  values  and  gradations  are  meas- 
ured by  a  colourimeter,  and  the  relative  fastness  of  colours 
by  a  fadeometer;  the  degree  of  gloss  is  measured  by  an 
Ingersoll  glarimeter;  and  for  the  measurement  of  bulk  under 
different  pressures  a  Perkins  bulk  tester  is  used. 

Chemical  and  Microscopical  Tests. — Chemical  tests  deter- 
mine, among  other  things,  the  percentage  of  ash,  the  quantity 
and  kind  of  loading,  or  sizing,  and  of  coating  material  used, 
and  the  presence  or  absence  of  free  acids.''  The  chief  value 
of  a  microscopical  test  is  to  determine  the  character  and  rela- 
tive percentages  of  the  fibre  content.  This  is  done  by  placing 
a  representative  lot  of  fibres  upon  a  slide,  colouring  them  with 
reagents,  and  then  estimating  through  the  microscope  the 
number  of  each  kind.  By  these  special  laboratory  tests  infor- 
mation which  is  often  very  significant  and  valuable  in  con- 
nection with  other  tests  may  be  obtained;  and  such  infor- 
mation if  properly  used  may  be  a  very  valuable  aid  in  select- 
ing and  buying  paper. 

The  Paper  Trade. — Paper  reaches  the  consumer  either 
direct  from  a  mill,  or  through  a  broker  who  may  represent 
several  mills,  or  through  a  paper  merchant.  It  has  been  esti- 
mated that  all  except  a  small  percentage — probably  less  than 
10  per  cent. — of  newsprint  paper,  and  possibly  more  than 
one-half  of  all  book  paper  manufactured,  reaches  the  con- 
sumer through  direct  sales  by  mills  or  their  agents,  or  brokers 
representing  these  mills,  rather  than  through  sales  by  paper 

"Free   acid   in   paper  may  cause   much  difficulty  in   printing    (e.g.,   in   offset 
work;,    and   will    injure    and   disintegrate   the   fibres. 


136     PURCHASING  PRINCIPLES  AND  PRACTICES 

merchants;  but  the  percentage  of  book  papers  sold  by 
merchants  seems  to  be  steadily  increasing.  The  products 
of  some  of  the  largest  and  best  mills,  for  instance,  can 
be  bought  only  from  certain  merchants  designated  as  their 
"distributors."  Most  of  the  writing  paper  and  the  wrap- 
ping paper  which  is  manufactured  is  sold  through  merchants, 
and  the  merchants  perform  a  highly  important  function, 
both  for  the  mills  and  for  the  public,  in  that  they  carry  at  all 
times  quantities  of  papers  in  stock  sizes. 

The  American  manufacturers  of  paper  (and  pulp)  are 
organized  into  a  national  association  known  as  the  American 
Paper  and  Pulp  Association,  and  the  merchants  into  a 
national  association  known  as  the  National  Paper  Trade 
Association. 

Trade  Customs. — The  rules  or  practices  governing  the 
purchase  and  sale  of  different  classes  of  paper  are  expressed 
in  a  somewhat  elaborate  (and  often  confusing)  series  of 
"trade  customs,"  with  which  all  buyers  of  paper  should  be 
familiar.  They  are  printed  in  the  price  lists  of  many  paper 
merchants  and  copies  may  readily  be  obtained. 

These  trade  customs  establish  for  each  class  of  paper  the 
basic  size  and  weight  for  that  paper,  and  the  regular  stock 
sizes  and  weights.  For  each  class  of  paper  a  minimum  basic 
weight  is  established;  and  it  is  provided  that  a  certain  pre- 
scribed extra  charge  shall  be  made  for  any  lot  lighter  than 
this  minimum  basic  weight. 

As  regards  book  papers,  for  instance,  the  minimum  basic 
weight  for  a  machine-finish  paper  is  45  lbs.;  for  supercalen- 
dered  paper,  50  lbs.;  for  paper  coated  on  one  side,  60  lbs.; 
and  for  paper  coated  on  two  sides,  70  lbs.  The  prescribed 
extra  charge  for  lighter  weight  machine-finish  paper  is  ar- 
rived at  by  adding  1  per  cent,  of  the  selling  price  for  each 
pound,  or  fraction  thereof,  below  45  lbs.,  down  to  and  includ- 
ing 3S  lbs.;  2  per  cent,  of  the  selling  price  for  each  pound,  or 
fraction  thereof,  below  30  lbs.;  and  3  per  cent,  of  the  selling 
price  for  each  pound  or  fraction  thereof,  below  30  lbs.,  down 
to  and  including  25  lbs. 

For  supercalendered  papers  the  corresponding  differentials 
are:  1  per  cent,  for  weights  between  50  lbs.  and  40  lbs.;  2 
per  cent,  for  weights  between  40  lbs.  and  3S  lbs.;  and  3  per 
cent,  for  weights  between  35  lbs.  and  30  lbs.;  and  for 
coated  paper  (coated  two  sides),  1  per  cent,  for  each  pound 


PAPER  137 

between  70  lbs.  and  45  lbs.;  and  2  per  cent,  for  each  pound 
between  45  lbs.  and  35  lbs. 

These  trade  customs  further  provide  that  a  minimum  mill 
run,  without  extra  charge,  for  a  paper  in  a  regular  size,  colour, 
and  substance  weight  shall  be  2,000  lbs.;  and  for  an  irregular 
size  in  a  regular  colour  and  substance  weight  shall  be  5,000 
lbs.;  and  for  a  regular  or  irregular  size  in  an  irregular  sub- 
stance weight  shall  be  10,000  lbs. 

Overruns  and  Underruns. — As  regards  variations  between 
the  quantity  ordered  and  the  quantity  delivered,  the  trade 
customs  provide  that  any  overrun  or  underrun  not 
exceeding  15  per  cent,  for  an  order  for  less  than 
5,000  lbs.,  not  exceeding  10  per  cent,  for  an  order 
for  between  5,000  and  10,000  lbs.,  not  exceeding  5  per  cent, 
for  an  order  for  between  10,000  and  40,000  lbs.,  and  not 
exceeding  3  per  cent,  for  an  order  for  more  than  40,000  lbs., 
is  to  constitute   a  good   delivery. 

As  regards  variations  between  the  ream  weight  speci- 
fied in  the  order,  and  the  actual  ream  weight  of  the  paper 
delivered,  trade  customs  provide  that  a  variation  not  ex- 
ceeding 5  per  cent,  above  or  below  the  ordered  weight  when 
between  45  lbs.  and  100  lbs.  basic  weights,  and  8  per  cent, 
when  below  45  lbs.  or  above  100  lbs.  basic  weights  is 
permissible.  Paper  within  this  range  constitutes  a  good  de- 
livery, it  being  specified,  however,  that  if  there  is  an  under- 
weight in  excess  of  2^  per  cent,  for  uncoated  or  of  5 
per  cent,  for  coated  paper,  the  paper  Is  to  be  charged  for  at 
the  actual  weight  Instead  of  at  the  weight  specified  In 
the  order. 

With  certain  qualifications  It  Is  specified  that  no  claim 
of  the  buyer  against  the  seller  on  account  of  the  delivery 
of  defective  paper  Is  to  be  valid,  If  the  claim  is  made 
"after  the  paper  Is  cut,  ruled,  or  printed,  or  otherwise  made 
commercially   defective." 

Buyer  Must  Know  Customs. — These  provisions,  all  of 
which  apply  to  book  papers  only,  will  give  some  Idea  of  the 
scope  and  character  of  the  trade  customs  now  In  effect.  Al- 
though in  practice  exceptions  are  made,  It  is  assumed  that 
every  individual  buyer  Is  familiar  with  and  Is  willing  to  abide 
by  these  trade  customs. 

It  would  seem  obvious  that  when  trade  customs  are  estab- 
lished for  any  trade,  the  interests  and  the  point  of  view  of  the 


138     PURCHASING  PRINCIPLES  AND  PRACTICES 

buyer  as  well  as  those  of  the  seller  should  be  taken  into  ac- 
count. Buyers,  however,  are  likely  to  be  unorganized,  though 
important  groups  of  buyers  of  paper  are  represented  in  such 
associations  as  the  United  Typotheta?  and  the  National  As- 
sociation of  Purchasing  Agents.  The  United  Typothetae 
have  contended  for  the  adoption  by  the  paper  trade  of  a  so- 
called  "long  list,"  the  essence  of  which  is  that  the  printers' 
share  in  the  marketing  of  paper  shall  be  recognized  by 
granting  them  special  discounts. 

References. — A  convenient  list  of  publications  relating  to 
paper  up  to  1913  may  be  found  in  a  pamphlet,  "The  Bibliog- 
raphy of  the  Pulp  and  Paper  Industries,"  Forest  Service 
Bulletin  No.  123  of  the  U.  S.  Dept.  of  Agriculture,  and 
there  is  a  later  and  more  complete  list  issued  by  the  Com- 
mittee on  Bibliography  of  the  Technical  Association  of  the 
Pulp  and  Paper  Industry,  and  published  serially  in  the 
"Paper  Trade  Journal"  during  1920  and  1921. 

The  following  books  will  be  found  useful :  W.  B.  Wheel- 
wright,  "From  Paper  Mill  to  Pressroom,"   Menasha,  Wis., 

1920,  a  brief  popular  summary;  R.  W.  Sindall,  "The  Manu- 
facture of  Paper,"  London,  1908,  and  "Paper  Technology," 
London,  1910;  G.  S.  Witham,  "Modern  Pulp  and  Paper 
Making,"  New  York,  1920,  intended  chiefly  as  a  manual  for 
those  engaged  in  the  making  of  paper;  E.  Sutermeister, 
"The   Chemistry  of   Pulp   and   Paper   Making,"   New  York, 

1921,  somewhat  technical  but  containing  useful  information 
for  the  general  reader;  and  E.  A.  Dawe.  "Paper  and  Its 
Uses,"  London,   1919. 

Among  special  journals  published  in  America  are  "Paper," 
"The  Paper  Trade  Journal,"  and  "The  Paper  Industry."  A 
useful  monthly  report  concerning  production  of  pulp  and 
paper  is  issued  by  the  Federal  Trade  Commission.  Lock- 
wood's  Directory,  published  annually,  is  an  indispensable 
manual. 


Chapter  XVI 

PAPER  SUPPLIES  USED  IN  CREAMERY 
INDUSTRY' 

Creameries  of  Recent  Growth. — It  has  been  in  the  last 
fifteen  or  twenty  years  only,  that  butter  has  been  churned  and 
packed  In  the  way  that  it  is  today.  In  earlier  days,  the  only 
butter  produced  was  on  the  farm,  and  it  was  made  in  a  very 
crude  way.  Later,  creameries  were  organized  in  the  same 
manner  that  weaving,  shoe  making,  and  flour  milling  were 
made  specialized  industries. 

Under  the  new  system,  butter  was  made  in  creameries,  to 
which  farmers  brought  whole  milk,  which  was  separated,  the 
cream  being  used  In  churning,  the  skimmed  milk  being  re- 
turned to  the  farmer  for  feeding  purposes.  Through  the 
introduction  of  the  hand  farm  separator,  a  further  Improve- 
ment was  developed,  and  in  place  of  hauling  large  quantities 
of  milk  every  day,  the  farmer,  through  use  of  his  own  separ- 
ator, could  make  deliveries  of  small  quantities  of  cream  at  his 
convenience.  The  development  of  the  Babcock  test — a 
method  by  which  the  fat  in  the  cream  or  milk  can  be  rapidly 
and  accurately  determined — and  the  use  of  the  farm  cream 
separator,  led  to  the  present  system  of  creamery  operation. 

Cream  is  now  gathered  In  country  towns,  or  shipped  di- 
rectly to  the  central  churning  point,  where,  under  the  most 
sanitary  conditions  and  scientific  methods,  a  uniform  quality 
of  butter  can  be  produced. 

This  method  of  operating  affords  a  greater  opportunity  for 
producing  butter  on  a  large  scale,  and  under  more  exacting 
methods  than  was  possible  In  the  past.  Supplies  of  all  sorts 
necessary  in  the  operation  of  a  creamery  can  be  purchased  In 
quantities,  and  at  correspondingly  lower  costs. 

Farmer  and  Consumer  Benefited. — Standardization  Is  pos- 
sible on  a  large  scale,  and.  In  general,  a  service  Is  rendered  to 

'  By  H.  W.  Post,  Purchasing  Agent,  Beatrice  Creamery  Company. 

139 


140     PURVHASING  PRINCIPLES  AND  PRACTICES 

both  the  farmer  and  the  consumer  at  a  cost  much  less  than 
would  be  possible  the  way  butter  was  made  years  ago. 

The  problem  of  the  creamery,  after  the  cream  has  been 
bought  and  churned,  is  to  sell  the  finished  butter.  Prior  to 
the  introduction  of  the  present  system,  butter  was  distributed 
in  a  very  crude  way  by  "commission  men."  Butter  was  packed 
and  handled  in  tubs  largely,  and  from  the  tubs  cut  into  vari- 
ous sizes  and  shapes  or  packages,  or  cut  right  out  of  the 
tub  and  sold  over  the  counter. 

As  competition  became  a  greater  factor,  it  was  found  neces- 
sary to  sell  butter  under  a  brand  carrying  the  guaranty  of 
the  maker.  In  other  words,  by  packing  and  branding  in 
special  packages,  a  demand  could  be  created  and  a  constant 
outlet  afforded.  The  development  of  the  package  idea  for 
butter  led  to  one  of  the  most  important  uses  of  paper  in  the 
creamery  industry. 

Paper  for  Wrapping  Butter. — Buying  paper  supplies  of 
various  sorts  for  wrapping  butter  is  one  of  the  most  important 
duties  of  the  creamery  purchasing  agent. 

Butter  was  packed  at  first  in  muslin  or  cheesecloth.  Today 
the  first  wrapping  on  butter  is  what  is  known  as  parchment 
paper.  This  paper  is  made  largely  from  sterilized  rags. 
Parchment  paper  is  odourless,  and  therefore  does  not  taint  the 
product  it  wraps.  It  also  keeps  out  all  odours  that  might  con- 
taminate the  butter.  Unlike  other  papers,  parchment  when 
saturated  with  water  is  rather  difficult  to  tear.  It  becomes 
more  like  a  piece  of  cloth.  The  sulphite  papers,  or  ordinary 
stock  made  from  wood  pulp,  would  break  apart  when 
moistened. 

Creameries  generally  use  a  30-pound  stock  for  wrapping 
print  butter  of  one-quarter,  one-half,  or  pound  size.  At  first, 
25-pound  stock  was  used,  but  it  was  found  a  little  too  light 
in  weight,  and  did  not  keep  the  butter  as  well  as  the  heavier 
stock.  Any  heavier  stock  than  30-pound  would  be  too  heavy 
to  use  on  a  small  package. 

Printing  on  the  Wrapper. — Many  concerns  use  printed 
parchment,  putting  their  trade-mark  and  various  advertising 
features  in  ink  on  the  parchment,  while  others  use  both  plain 
and  printed.  Parchment  paper  is  cut  in  standard  sizes  for  the 
butter  trade.  The  most  common  size  is  the  1-pound,  8x11 
inch  parchment.  A  considerable  amount  of  butter  is  still 
packed  in  tubs  for  wholesale  trade,  and  these  tubs  are  lined 


SUPPLIES  USED  IN  CREAMERY  INDUSTRY     141 

with  parchment  and  have  a  top  and  bottom  circle.     This  stock 
is  usually  30-pound  weight. 

Butter  tubs  and  their  parchment  liners  and  circles  are 
more  nearly  standardized  than  the  prints.  Most  creameries 
still  wrap  their  butter  by  hand,  but  the  wrapping  machines 
are  gradually  replacing  hand  work. 

Packing  in  Cartons  or  Wrappers. — After  the  butter  is 
wrapped  In  the  parchment,  some  creameries  pack  In  cartons, 
while  others  add  a  second  wrapper  of  waxed  or  paraffined 
stock.  This  second  wrapper  Is  made  from  sulphite  stock,  and 
may  be  waxed  or  paraffilned  on  one  or  both  sides.  The  best 
grade  of  wax  paper  Is  prepared  with  special  grade  paraffine 
wax,  most  of  which  comes  from  India.  This  paraffine  has  a 
melting  point  of  from  138  to  140  degrees  Fahrenheit. 

Some  creameries  hand-wrap  the  wax  paper  around  the  but- 
ter, while  others  use  machines  for  this  operation.  Some 
machines  place  the  wax  paper  Inside  the  carton,  as  It  is  formed 
on  the  machine,  and  Interlock  the  carton  and  the  wax  liner 
between  the  two  ends,  making  an  air-tight,  dust-proof 
package. 

Wax  paper  should  always  be  kept  In  a  cool  place.  If  stored 
in  a  warm  room,  it  will  stick  together  in  one  solid  mass. 
Sometimes  wax  paper  shipped  during  the  summer  months 
sticks  together.  Where  this  happens,  It  Is  necessary  to  pull 
the  sheets  apart  one  at  a  time.  If  the  paper  sticks  through 
heating,  it  may  be  placed  in  a  cooler  or  freezer  until  chilled, 
when  it  hardens  sufficiently  to  permit  handling.  Two  styles 
of  cartons  are  used  in  packing  butter;  one  a  plain  paraffined 
carton,  and  the  other  a  heavily  paraffined,  printed  carton. 

Board  for  Cartons. — Several  kinds  of  board  are  used  In 
making  cartons.  Most  plain  cartons  are  made  from  cracker 
shell,  manlla-lined  chip  board,  solid  news,  or  solid  manila. 
While  some  of  these  cartons  are  printed,  many  are  plain  and 
enclosed  in  an  outside  paper  wrapper.  Printed  cartons  are 
mostly  made  from  patent-coated,  solid,  manila  stock,  or  sul- 
phite stock,  bleached  on  one  or  both  sides. 

The.thickness  or  "caliper"  of  the  board  is  not  the  only  con- 
sideration. It  is  Important  that  the  carton  have  sufficient 
body  to  keep  its  shape  when  filled  with  butter.  For  instance, 
if  a  24-poInt  board  without  much  body  were  used,  the  carton 
would  lose  its  shape  as  soon  as  It  became  moist.  This  would 
not  be  a  satisfactory  carton  for  butter.     On  the  other  hand, 


142     PURCHASING  PRINCIPLES  AND  PRACTICES 

a  15-point  board,  calendered    hard,    might    be    found    quite 
satisfactory. 

When  the  carton  is  to  be  made  on  a  machine,  another  factor 
must  be  considered.  Board  for  this  purpose  must  be  just  stiff 
enough  to  form  properly,  without  creasing  or  losing  its  shape 
when  the  cover  is  down. 

Keeping  the  Butter  Sweet. — The  paraffined  carton  helps 
to  keep  in  the  flavour  of  the  butter  and  to  keep  out  all  odours. 
Practically  all  butter  cartons  are  paraffined  on  one  or  both 
sides.  Board  is  paraffined  by  passing  it  over  warm  rollers, 
one  of  which  runs  in  a  paraffine  bath.  The  hot  board  readily 
absorbs  the  melted  paraffine.  The  board  is  then  cut  into  proper 
sizes  for  cartons.  If  a  printed  carton  is  used,  the  board  goes 
from  the  rollers  through  a  bath  of  cold  water.  This  sets  the 
paraff.ne  on  the  board,  and  gives  it  a  highly  glossed  finish. 

A  great  deal  of  butter  sold  today  is  packed  in  printed  car- 
tons. A  highly  glossed  finish  and  good  printing  make  a  very 
satisfactory  and  attractive  package.  Many  prefer  a  package 
made  with  a  printed  wrapper  over  a  plain  carton,  because  it 
is  a  sealed,  air-tight  and  dust-proof  package.  Wrappers  for 
this  style  package  are  usually  printed  on  book  stock  coated  on 
one  side,  although  other  papers  are  sometimes  used.  Two 
kinds  of  coating  are  used  in  the  manufacture  of  this  paper,  one 
made  from  starch  and  the  other  from  casein. 

Paper  Coating  and  Colours. — The  casein  coating  is  made 
from  buttermilk,  a  more  satisfactory  coating  than  starch,  for 
casein  adheres  to  the  raw  stock  better.  The  white  paper  used 
for  wrappers  is  cut  from  25  x  38  inch,  55-pound  stock — that 
is,  55  pounds  to  500  sheets. 

Should  coloured  paper  be  used  for  packing  butter,  the 
paper  must  be  a  good  grade  and  have  good  colour  to  with- 
stand the  salt  or  brine,  which  sometimes  comes  out  of  the 
butter  on  to  the  wrapper.  If  it  does  come  out,  and  the  paper 
has  not  been  treated,  the  colour  will  run  and  spoil  the  pack- 
age. Most  colouring  used  in  the  manufacture  of  butter 
wrappers  is  specially  made  to  withstand  the  effects  of  salt  or 
brine. 

In  some  creameries  the  outside  wrapper  is  put  on  by  hand, 
but  in  others  it  is  machine-wrapped.  With  machines  the  pack- 
ages are  more  uniformly  wrapped,  with  less  waste,  and  with 
considerablv  less  labour  than  would  be  possible  in  wrapping 
by  hand.    As  a  rule,  wrappers  are  purchased  in  sets.    In  other 


SUPPLIES  USED  IN  CREAMERY  INDUSTRY     143 

words,  one  wrapper  and  two  seals  make  a  set  for  one  package. 

Use  of  Paper  Containers  Increasing. — After  the  wrapper 
is  placed  around  the  filled  carton,  it  is  put  into  containers  for 
convenience  in  handling  and  shipping.  Wood  is  used  to  some 
extent,  but  paper  containers  have  displaced  wooden  boxes  in 
many  plants,  because  wood  requires  too  much  space,  and  adds 
to  the  freight  charges.  Paper  containers  are  also  cheaper, 
and  are  more  economically  put  together. 

There  are  two  paper  containers  which  are  usually  used, 
the  straight  fibre-board  container,  and  the  corrugated  con- 
tainer. Fibre  board  is  made  principally  of  chipboard,  with  a 
jute  liner.  In  some  instances  a  manila  liner  is  added.  The 
corrugated  container  used  by  a  great  many  shippers,  not  only 
for  butter  but  many  other  commodities,  is  usually  made  with 
a  jute  liner  with  a  back  of  sulphite  screenings  or  chip,  and  a 
corrugated  centre  of  strawboard.  When  made  and  sealed 
properly,  these  two  packages  are  satisfactory  for  butter. 

Container  Strength  Guaranties. — Under  present  express 
and  railroad  regulations,  a  certain  strength  board  is  required 
for  each  size  package.  All  container  manufacturers  stamp 
their  containers  with  a  guaranty  of  strength,  and  state  that 
it  complies  with  tariff  regulations.  A  60-point  board  should 
be  used  for  weights  up  to  40  pounds.  From  that  weight  up  to 
65  pounds,  an  80-point  board  should  be  used;  and  for  weights 
up  to  90  pounds,  100-point  board  is  used.  At  present,  the 
50-pound  container  is  the  largest  size  used  for  shipping. 

At  first,  containers  were  closed  with  kraft  sealing  tape,  on 
both  top  and  bottom.  Later,  a  machine  was  invented  for 
stapling  bottoms  and  sides  with  copper  wire.  Sealing  tape  is 
then  used  on  the  top  only.  This  makes  a  very  substantial 
package.  Machines  have  recently  been  invented  that  will 
not  only  staple  the  bottom  and  sides,  but  will  also  staple 
the  cover  after  the  container  has  been  filled. 

In  many  cases,  butter  is  packed  in  wooden  boxes.  These 
are  usually  made  of  either  poplar  or  spruce.  Some  woods 
may  not  be  used  because  they  have  a  strong  odour,  and  butter 
put  into  storage  or  kept  any  length  of  time  in  boxes  made  of 
these  woods  absorbs  the  odour  of  the  wood. 

Standardizing  Forms. — Besides  knowing  the  paper  sup- 
plies and  materials  used  in  packing  butter,  it  is  necessary  for 
the  creamery  purchasing  agent  to  familiarize  himself  with  all 
kinds  of  paper  used  in  the  stationery  of  the  business.     It  is 


144     PURCHASING  PRINCIPLES  AND  PRACTICE": 

v^ery  important  to  standardize  forms  as  nearly  as  possible  and 
thereby  be  able  to  buy  in  quantities. 

Most  of  the  forms  in  the  creamery  office,  outside  of  ledger 
and  register  sheets,  are  made  up  on  16-pound  medium  grade 
bond,  although  letterheads  are  generally  printed  on  20- 
pound  stock.  Forms  should  be  of  such  size  as  to  cut  from 
stock,  without  waste  if  possible.  The  purchasing  agent  should 
also  familiarize  himself  v/ith  printing  and  lithography,  in 
order  to  be  able  to  buy  economically.  Many  times  several 
colours  are  used  on  a  letterhead,  or  other  printed  matter, 
which  could  be  eliminated  without  detracting  from  the  effec- 
tiveness of  the  general  appearance. 

It  is  important  that  the  punching  on  all  forms  for  binders 
be  of  standard  size  and  distance  apart,  so  that  they  will  fit 
standard  or  stock  binders.  This  helps  to  cut  down  the  cost  of 
special  binders  for  different  forms. 

Watching  the  Various  Markets. — In  buying  supplies  and 
equipment  for  the  creamery  industry,  as  in  any  other  line  of 
business,  the  purchasing  agent  should  keep  in  close  touch  with 
the  markets  on  the  various  supplies  he  is  buying.  This  in- 
formation can  be  obtained  by  keeping  in  contact  with  the 
supply  manufacturers,  by  reading  market  reports  in  the  news- 
papers and  trade  journals,  and  by  consulting  other  buyers. 

There  is  no  one  best  time  in  which  to  buy  any  commodity. 
It  all  depends  on  market  conditions.  In  the  creamery  busi- 
ness we  buy  many  of  our  supplies  in  the  early  spring,  because 
much  more  butter  is  churned  and  packed  during  the  spring 
and  early  summer  than  the  rest  of  the  year. 


Chapter  XVII 

PURCHASING  AUTOMOBILE  TIRES 

Fkiding  the  Right  Tire. — The  purchasing  agent  who  Is 
responsible  for  the  purchase  of  a  large  number  of  automobile 
tires  should  know  the  whole  history  of  the  materials  that 
enter  into  their  manufacture,  and  be  familiar  with  the  various 
methods  of  manufacture,  and  the  advantages  and  disadvant- 
ages of  each.  The  conditions  under  which  various  weight 
trucks  operate  vary  so  greatly  from  month  to  month,  and 
from  one  locality  to  another,  that  the  shrewd  purchasing 
agent  must  necessarily  do  a  good  deal  of  experimenting,  be- 
fore he  finds  the  tire  that  is  best  suited  to  the  needs  of  his 
particular  business. 

Ordinarily,  the  firm  that  sold  the  trucks  for  which  he  is 
purchasing  automobile  tires,  will  have  a  considerable'hody  of 
data  on  the  first  cost,  and  the  maintenance  charges,  for  tires 
of  the  various  kinds  for  their  particular  trucks.  This  data, 
checked  and  verified  by  his  own  experience,  under  his  own 
particular  operating  conditions,  is  the  only  guide  the  inexperi- 
enced purchasing  agent  can  at  first  use. 

Records  Will  Show  Results. — If,  however,  the  operating 
department  keeps  careful  records  not  only  of  the  mileage 
received  from  each  tire,  but  of  the  kind  of  truck  it  is  used  on, 
the  routes  it  runs,  whether  city  or  town,  and  the  sort  of  driv- 
ers in  charge  of  the  trucks  using  the  tires,  the  purchasing 
agent  will  be  able  in  a  short  time,  to  form  an  adequate  opinion 
concerning  the  merit  of  the  type  of  tires  In  service  at  any 
particular  time. 

Finding  the  tire  that  just  fits  your  particular  needs,  and 
your  particular  operating  conditions,  and  which  produces  the 
maximum  amount  of  service  at  the  minimum  cost,  must  nec- 
essarily be  the  result  of  considerable  careful  study.  A  safe 
policy  is  to  strive  to  profit  by  the  experiences  of  others,  whose 
operating  conditions  approach  yours,  and  then  try  to  improve 
upon  their  findings  by  careful  study,  and  the  exercise  of  your 
purchasing  ability  and  sense  of  values. 

145 


146     PURCHASING  PRINCIPLES  AND  PRACTICES 

Tire  Rubber. — Automobile  tires  are  built  of  rubber  of  vari- 
ous kinds,  mixed  with  various  compounds,  and  strengthened 
by  fabric  of  various  types.  Crude  rubber,  as  everyone  knows, 
is  the  congealed  latex  of  certain  shrubs,  vines,  and  trees  that 
thrive  in  tropical  countries.  This  latex  Is  not,  strictly  speak- 
ing, the  sap,  as  It  Is  drawn  from  the  bark.  The  latex  is  carried 
through  the  bark  by  a  scries  of  tiny  veins  not  unlike  the 
lymphatic  system  of  the  human  body. 

An  analysis  of  the  latex  of  the  heva  tree,  which  produces 
most  of  the  commercial  rubber,  is  as  follows: 


Constituents 

Pel 

centages 

Rubber 

37 

Albumen 

3 

Rosin 

5 

Water 

52 

Traces    of 

oil, 

sugar 

and 

other 

forei 

ign 

matter 

3 

In  its  natural  state,  rubber  is  insoluble,  except  in  certain 
volatile  oils.  Because  rubber  is  soluble  In  certain  oils,  the  con- 
tinued contact  with  any  oil  tends  to  shorten  the  life  of  any 
rubber  product. 

Native  Rubber. — Originally,  all  rubber  was  of  the  wild  or 
native  type,  and  the  commercial  unit  was  the  ham,  which  was 
built  up  by  dipping  a  stick  In  the  latex,  and  drying  the  adhering 
film  over  a  wood  fire.  The  hams  were  built  up  by  hand,  one 
layer  at  a  time.  The  process  was  slow,  and  these  hams  often 
were  found  to  contain  a  considerable  amount  of  foreign  mat- 
ter, at  first  because  of  the  Inexpertness  of  the  natives,  later 
because  of  dishonesty. 

Plantation  Crepe. — As  the  name  Implies,  plantation,  or 
crepe  rubber.  Is  that  obtained  under  cultivation.  The  method 
of  preparing  the  plantation  rubber  most  In  use  is  to  skim  and 
strain  the  latex,  and  then  pour  It  into  a  large  tank,  adding  a 
weak  solution  of  acetic  acid.  This  mixture  Is  allowed  to  stand 
over  night,  and  the  crude  rubber  Is  found  floating  on  the  sur- 
face in  the  morning.  The  last  step  In  the  manufacture  of 
crepe  is  to  wash,  and  sometimes,  to  smoke  It.  It  Is  white 
when  first  washed,  but  turns  yellow  with  time.  This  Is  the 
plantation  crepe  rubber  with  which  we  are  all  familiar.  The 
Imports  of  rubber  for  1919  and  the  sources  were  as  follows: 


PURCHASING   AUTOMOBILE    TIRES         147 

Sources  Long  tons 

Plantations     192,270 

Paras  27,058 

African    3,340 

Centrals    1,423 

Guayule    1,501 

Manicabo  and  Malto  Cross    440 

226,032 

Tire  Fabrics. — The  second  element  in  the  manufacture  of 
automobile  tires  is  the  fabric.  As  the  automobile  tire  depends 
almost  entirely  upon  the  several  layers  of  cotton  fabric  for 
its  strength,  it  follows  that  the  tire  that  is  built  to  wear  must 
have  a  carcass  reinforced  by  fabric  made  from  the  strongest 
possible  cotton.  The  strongest  cottons  available  are  the 
Egyptian  and  the  so-called  Sea  Island  cottons. 

Egyptian  cottons  are  used  mostly  by  the  European  tire 
builders,  while  the  American  manufacturers  depend  almost 
entirely  upon  the  Sea  Island  cotton,  and  its  more  recent  rival 
Pima  cotton.  Sea  Island  cotton  was  so  called  because  it  came 
from  a  group  of  Carolina  off-shore  islands  which  had  just  the 
right  climatic  conditions  to  produce  long  staple  cotton  of 
great  strength.  Pima  cotton  comes  from  irrigated  land  where 
Ideal  growing  conditions  are  artificially  obtained.  The 
Bureau  of  Standards  Bulletin  Number  68,  page  15,  contains 
the  details  of  certain  tests  made  to  determine  the  relative 
strength  of  combed  Sea  Island  cotton,  and  carded  Egyptian 
cotton. 

Mill  and  Bureau  Tests. — The  mill  tests  showed  that  the 
tensile  strength  of  a  test  piece  varied  from  213  pounds  to  262 
pounds,  while  the  Bureau  of  Standards  showed  the  breaking 
point  to  vary  from  219  to  230.  The  carded  Egyptian  cotton 
varied  little,  the  average  being  about  190  pounds. 

It  should  be  added  that  all  these  tests  were  made  under 
identical  atmospheric  conditions,  because  even  a  rather  slight 
increase  or  decrease  in  the  moisture  content  would  distort  the 
results.  Tests  indicate  that  up  to  10  per  cent,  the  increase  of 
each  1  per  cent,  in  the  uncombined  moisture  contained  in  the 
cotton  not  only  increases  the  weight  and  improves  the  appear- 
ance of  the  tire  fabric,  but  actually  increases  the  tensile 
strength  7  per  cent.  Because  of  this  factor,  it  is  of  prime 
importance  that  the  purchasing  agent  who  buys  large  quanti- 
ties of  tire   fabrics  not  only  have  the  means   of  testing  all 


148     PURCHASING  PRINCIPLES  AND  PRACTICES 

deliveries  made,  but  that  he  also  have  adequate  Inspection 
facilities,  and  that  he  be  prepared  to  check  accurately  the 
amount  of  moisture  in  the  samples,  and  in  the  fabric  delivered. 
A  careful  tabulation  of  the  results  of  testing  several  hun- 
dred samples  shows  that  the  average  moisture  content  In 
number  one  tire  fabric  Is  about  4.85  per  cent. 

The  Manufacture  of  the  Tires. — ^When  the  crude  rubber  is 
received  at  the  tire  factory,  it  is  all  Inspected  and  carefully 
dried.  It  is  then  ready  to  be  compounded.  The  various  com- 
pounding formulas  vary  widely.  These  compounds  are  added 
because  pure  rubber  does  not  possess  the  necessary  wear 
resisting  qualities. 

Without  a  certain  amount  of  sulphur  the  tires  would  be 
very  short-lived.  Other  compounds  commonly  used  are  lamp- 
black which  not  only  darkens  the  stock,  but  toughens  it  some- 
what; zinc  oxide,  which  toughens  the  stock,  and  adds  to  both 
the  tensile  strength  and  the  wear-resisting  qualities;  lltho- 
pone,  which  adds  a  reddish  colour  and  hastens  the  vulcaniz- 
ing process;  litharge,  barium,  sulphite,  and  whiting,  which 
act  merely  as  Inert  fillers.  Under  certain  conditions 
varying  amounts  of  linseed  oil  products  and  mineral  hydro- 
carbons are  added  to  soften  uncured  stocks  and  to  act  as 
fluxes. 

The  process  of  manufacturing  an  automobile  tire  is,  briefly, 
that  of  forcing  live  rubber  through  the  fabric,  and  then  build- 
ing up  the  tire  with  alternate  layers  of  the  tire  fabric  and 
rubber,  after  which  the  tire  is  cured  and  vulcanized  by  the 
application  of  both  heat  and  pressure. 

Cord  Versus  Fabric. — The  cord  tire  differs  from  the  fabric 
tire  in  that  it  is  strengthened  by  heavy  cords  in  crisscross  lay- 
ers. These  cords  have  just  enough  cross  threads  to  keep  them 
in  place.  In  other  words,  the  fabric  in  the  cord  tire  is  made 
up  of  heavy  warp,  with  just  enough  woof  to  keep  the  warp  In 
place. 

It  Is  claimed,  apparently  with  good  reason,  that  the  cord 
tire,  when  properly  built  will  outlast  the  fabric  tire,  because 
the  cords  adapt  themselves  more  easily  to  the  changes  in  the 
road  bed  and  in  the  load,  and  there  is  a  minimum  amount  of 
friction  and  heat  generated  inside  the  tire  from  the  action  on 
the  road.  Fabric  tires  are  quickly  burned  up  by  heat  gener- 
ated by  friction  on  the  road  when  they  are  run  under  severe 
loads,  or  when  they  are  run  at  excessive  speeds. 


PURCHASING   AUTOMOBILE    TIRES         149 

The  Economical  Choice. — It  would  seem,  then,  that  as 
fabric  tires  are  somewhat  less  expensive  than  cord  tires,  they 
would  prove  to  be  admirable  for  small  light  cars  that  do 
not  travel  at  high  speeds;  but  that,  for  heavy  duty,  or  for  the 
car  that  must  travel  at  high  speed,  or  must  travel  over  rough 
roads,  the  cord  tire  would  be  the  best  investment  in  the  long 
run. 

The  cord  tire  is  more  nearly  a  complete  unit,  and  does  not 
tend  to  go  to  pieces  under  the  stress  and  strains  of  the  road. 
Fabric  tires  usually  first  show  signs  of  failure  along  the  sides, 
where  layers  of  fabric  begin  to  come  apart  under  the  com- 
bined action  of  pressure  and  strain  on  the  side  walls  under 
flexure. 


Chapter  XVIII 

TEXTILE  PURCHASING  DIFFICULT 

A  Test  for  the  Buyer. — More  fully  perhaps  than  In  any 
other  line,  does  the  purchase  of  textiles  test  the  resources  of 
the  modern  purchasing  agent.  There  are  so  many  different 
types  of  textiles,  which  may  be  used  for  such  a  wide  variety 
of  purposes,  that  the  process  of  selecting  the  one  textile  that 
will  produce  the  greatest  value  per  dollar  expended  is  far 
from  simple.  In  purchasing  textiles  of  various  kinds  the  pur- 
chasing agent  may  have  the  aid  of  a  complete  chemical  and 
testing  laboratory,  or  he  may  have  to  operate  with  very  little 
equipment  save  his  native  shrewdness,  and  his  ability  to  judge 
the  fairness  and  the  honesty  of  the  vendor. 

In  any  case,  however,  he  ought  at  least  to  have  a  pocket 
linen  glass,  and  a  teasing  needle.  If  he  has  no  teasing  needle, 
an  excellent  substitute  may  be  made  by  pulling  the  rubber 
from  the  end  of  the  lead  pencil,  forcing  a  pin  through  it 
lengthwise,  and  then  returning  the  rubber  to  the  end  of  the 
pencil.  This  gives  you  a  fine  point  mounted  on  a  handle.  With 
the  aid  of  the  glass  and  the  needle  It  Is  possible  accurately  to 
count  the  threads  per  square  Inch  in  both  the  warp  and  the 
woof  of  the  cloth  under  examination. 

The  Linen  Glass. — The  linen  glass  is  nothing  more  than  a 
small  magnifying  glass,  mounted  over  a  folding  base  that  has 
an  aperture  exactly  one-quarter  inch  square.  With  the  aid  of 
the  glass  and  the  home-made  teasing  needle  It  Is  quite  easy  to 
count  the  number  of  threads  running  each  way  within  the 
quarter  inch  aperture  at  the  base  of  the  glass.  By  multiply- 
ing this  number  by  four  you  get  the  number  of  threads  per 
square  inch.  For  instance,  a  piece  of  cheese  cloth  that  shows 
seven  threads  running  one  way  and  eight  threads  running  the 
other  way  is  known  as  a  28  x  32  count  cheese  cloth. 

Many  considerations  enter  into  the  purchase  of  textiles  of 
various  kinds  for  various  purposes.  Some  of  these  considera- 
tions must  be  taken  Into  account  In  the  purchase  of  any  textile, 
and  all  of  them  have  to  be  taken  into  account  for  the  purchase 
of  some.     They  are  as  follows: 

150 


TEXTILE    PURCHASING   DIFFICULT        151 

UNITS  IN  TEXTILE  VALUES 

A.  Tensile  strength 

B.  Resistance  to  wear 

C.  Ability   to    resist   the    action    of   special    factors,    such    as    the    presence    of 
moisture  or  acids 

D.  Heat  conductivity,  or   lack  of  conductivity 

E.  Appearance 

F.  Permanency  of  this   appearance 

G.  Sizes    in    which    available 

H.  First  cost,  and  maintenance  cost 

Tensile  Strength. — The  tensile  strength  of  the  sample  un- 
der consideration  can  be  tested  by  any  one  of  several  simple 
devices  which  record  the  breaking  point  under  a  uniform  pull. 
Resistance  to  wear  is  just  a  bit  more  difficult  to  determine  as, 
in  order  to  make  a  fair  test,  the  actual  service  conditions 
under  which  the  goods  will  be  subject  to  wear  must  be 
duplicated,  if  the  test  is  to  be  of  any  value. 

There  are  numerous  machines  on  the  market  which  are 
designed  to  duplicate  actual  wearing  conditions.  Some  of 
these  machines  have  been  developed  by  the  Bureau  of  Stand- 
ards for  carrying  on  the  tests  at  the  Bureau.  Full  informa- 
tion concerning  these  wear-testing  machines  may  be  obtained 
by  addressing  the  Director  of  the  Bureau  of  Standards,  at 
Washington.  Some  of  these  are  available  commercially,  and 
some  of  them  are  not. 

Special  Factors. — The  ability  of  various  samples  to  with- 
stand peculiar  conditions  under  which  the  materials  must  be 
used,  when  purchased,  may  only  be  determined  by  duplicating 
in  the  laboratory,  as  accurately  as  may  be,  actual  conditions. 
If  the  amount  of  material  to  be  purchased  is  large,  it  is  usually 
desirable  to  check  farther  the  findings  of  the  laboratory,  by 
first  trying  out  a  number  of  samples  in  the  shop  before  the 
whole  lot  is  purchased. 

In  arranging  for  the  laboratory  tests  of  any  material,  it  is 
well  to  keep  constantly  in  mind  the  fact  that  the  laboratory 
tests  can,  at  best,  only  approximate  on  a  small  scale,  actual 
tests  to  which  the  material  will  be  put  in  service.  These 
laboratory  tests  are  of  great  value  and  every  modern  purchas- 
ing agent  should  have  at  least  occasional  recourse  to  a  reliable 
laboratory,  but  in  the  last  analysis  the  only  complete  test  is  the 
ability  of  the  given  product  to  stand  up  under  actual  operating 
conditions  in  actual  service. 

Laboratory  Tests. — These  general  remarks  concerning  the 
value  and  the  limitations  of  laboratory  tests  can  best  be  illus- 


152     PURCHASING  PRINCIPLES  AND  PRACTICES 

trated  by  the  tests  of  rubber  heels  and  composition  soles  the 
Bureau  of  Standards  conducted  for  an  Eastern  manufacturer, 
two  years  ago.  The  manufacturer  had  sent  to  the  Bureau  a 
number  of  pairs  of  rubber  heels,  and  a  number  of  composition 
soles  of  various   compositions. 

The  Bureau  examined  the  material  under  the  microscope, 
and  submitted  small  samples  to  chemical  analysis,  but  its 
real  test  was  that  of  actual  service.  A  number  of  employees 
were  fitted  out  with  the  rubber  heels  and  the  composition  soles. 
In  some  cases,  the  employees  wore  one  composition  sole  and 
one  leather  sole.  In  some  cases,  they  wore  one  of  the  new 
composition  soles,  and  one  of  another  standard  make.  The 
report  the  director  of  the  Bureau  of  Standards  made  upon  the 
wearing  qualities  of  the  various  pieces  was  based  largely  upon 
the  wearing  tests,  which  the  manufacturer  could  have  con- 
ducted for  himself  without  any  machinery  whatever. 

Heat  Conductivity. — In  certain  textiles,  the  ability  to  act 
as  non-conductors  of  heat  is  of  prime  importance.  Much  of 
the  value  of  woolen  goods  depends  upon  the  fact  that  they 
are  good  non-conductors  of  bodily  heat,  and  so  tend  to  keep 
the  wearer  warm.  In  the  purchase  of  certain  types  of  textiles, 
the  appearance,  and  the  fabric's  ability  to  retain  this  pleasing 
appearance  for  a  reasonable  length  of  time,  is  of  prime 
importance. 

The  suiting  may  have  a  pleasing  stripe  effect,  but  if  the 
stripes  wear  off  the  second  week,  it  is  not  nearly  as  valuable 
as  it  might  be.  A  prime  requirement  for  suitings  is  a  pleasing 
appearance,  and  this  pleasing  appearance  should  last  until  the 
material  is  worn  out;  but  another  requirement  is  that  the 
material  should  not  wear  too  long!  Most  suitings  used  in 
this  country  arc  intentionally  constructed  so  they  will  last  one 
season  and  no  longer,  and  so  that  they  will  look  well  for  the 
entire  period  of  their  life.  Because  of  this  fact,  nearly  fifty 
per  cent,  of  the  wool  used  in  this  country  is  re-worked  wool,  or 
"shoddy."  There  can  be  no  possible  objection  to  the  use  of  a 
certain  percentage  of  re-worked  wool,  if  the  finished  material 
does  not  need  to  withstand  long  and  hard  wear;  and  because 
of  the  short  fibre  of  the  re-worked  wool,  materials  made  from 
it,  or  materials  which  contain  a  high  percentage  of  it,  do  not 
wear  long. 

No  Objection  to  Shoddy. — Now,  as  the  use  of  re-worked 
wool  lowers  the  cost  of  the  fabric,  and  as  the  fabric,  generally 


TEXTILE   PURCHASING   DIFFICULT        153 

speaking,  lasts  until  the  styles  change,  there  can  be  no  objec- 
tion to  the  use  of  re-worked  wool  or  shoddy.  An  added  argu- 
ment, and  a  good  one,  in  fav^our  of  the  continued  use  of  re- 
worked wool,  even  in  our  best  suitings,  is  that  at  the  present 
rate  of  consumption,  and  at  the  present  rate  of  production, 
there  would  not  be  enough  wool  in  the  country  to  give  every- 
one a  new  suit  each  year. 

It  is  a  well  known  fact  that  woolen  cloths  may  be  turned 
out  that  will  not  only  last  more  than  one  season,  but  will  last 
practically  for  a  generation.  For  instance,  the  average  French 
peasant  buys  one  new  suit  when  he  is  married,  and  he  wears 
that  same  suit  for  all  state  occasions  until  it  comes  time  to  be 
buried  in  it.  Because  he  normally  does  not  have  one  new  suit 
a  year,  but  only  one  new  suit  in  a  lifetime,  he  must  have  a 
suit  of  clothes  made  of  materials  that  will  withstand  that  sort 
of  wear. 

That  kind  of  material  could  be  turned  out  in  this  country 
as  well  as  in  France,  or  Scotland,  if  there  were  a  large  de- 
mand for  it.  Because  the  demand  is  for  materials  which  will 
last  only  about  one  season,  however,  the  mills  are  not 
equipped  to  turn  out  the  better  quality  of  suitings,  and  under 
our  factory  methods,  the  cost  of  producing  only  a  limited 
yardage  would  be  prohibitive. 

Textiles  Are  Costly. — The  purchase  of  textiles  soon 
mounts  up  into  considerable  sums  of  money,  rendering  it  nec- 
essary for  the  purchasing  agent  to  exercise  the  greatest  skill 
in  the  selection  of  the  material  which  will  deliver  the  greatest 
amount  of  service  per  dollar  expended. 

The  purchasing  agent  who  buys  thousands  of  yards  of  silk 
bolting  cloth  of  a  given  specification  every  year,  without 
knowing  at  first  hand  that  bolting  cloth  of  that  particular 
specification  will,  under  the  working  conditions  existing  at  his 
plant,  deliver  the  maximum  amount  of  service  per  dollar  ex- 
pended in  material,  or  in  labour  necessary  in  putting  that 
material  in  service,  is  not  serving  his  firm  or  institution  to  the 
best  of  his  ability.  He  is  not  making  the  best  of  his  opportuni- 
ties. Note  that  it  is  not  enough  to  know  which  bolting  cloth 
will  deliver  the  greatest  number  of  hours'  service  per  dollar 
expended,  without  knowing  absolutely  that  there  are  some 
other  factors  that  more  than  offset  the  supposed  economies 
In  using  that  particular  kind  of  material. 

If,  for  example,  the  total  unit  cost  of  the  material,  plus  the 


154     PURCHASING  PRINCIPLES  AND  PRACTICES 

total  cost  of  taking  off  the  old  material,  less  the  salvage  value 
of  the  old  material  per  unit,  is  higher  than  the  cost  of  another 
type  of  material,  plus  the  cost  of  changing,  minus  the  value  of 
the  salvage,  it  is  up  to  the  purchasing  agent  to  find  that  out 
before  any  one  else  makes  the  discovery. 

Buyer  Must  Know. — You  may  argue,  and  not  without 
justification,  that  it  is  the  duty  of  the  purchasing  agent  to  buy 
the  material  specified  by  the  operating  department,  and  that 
to  attempt  to  dictate  specifications  to  the  operating  depart- 
ment simply  will  lead  to  difficulties  between  the  departments, 
and  get  neither  anywhere.  That  is  quite  true.  The  purchas- 
ing agent  for  any  firm  who  expects  to  remain  with  that  firm 
long,  must  early  learn  not  to  dictate  to  any  department  head. 

If  you  will  follow  the  changes  which  take  place  within  any 
large  organization,  you  will  invariably  find  that  the  depart- 
ment head  who  attempts  to  dictate  to  any  other  department 
head  for  any  length  of  time,  usually  succeeds  in  eliminating 
himself  sooner  or  later. 

You  should  not  attempt  to  dictate  to  the  mill  foreman  the 
sort  of  bolting  cloth  that  should  be  used.  If,  however,  there 
exists  a  real  doubt  concerning  the  fiitness  of  that  particular 
kind  of  bolting  cloth  for  your  particular  kind  of  service,  it  is 
up  to  you  to  reinforce  your  ideas  and  convictions  with  a  large 
body  of  facts  concerning  the  prime  and  other  costs  of  that 
item,  and  the  costs  of  other  types  of  material  that  will  do  the 
same  work. 

Learn  the  Reasons  Why. — If  your  costs  are  twice  as  high 
as  those  in  a  similar  plant,  you  can  find  ways  of  learning 
the  reason  for  your  high  costs,  or  your  neighbours'  low  costs. 
The  mere  fact  that  a  material  is  the  kind  of  material  you  have 
always  used  is  no  argument  for  its  continued  use,  but  is  rather 
one  of  the  strongest  possible  arguments  in  favour  of  a  careful 
canvass  of  the  facts,  or  supposed  facts,  which  originally  led  to 
the  selection  of  that  material. 

The  world  does  not  stand  still,  and  the  intelligent  change  of 
supply  items,  and  the  Intelligent,  well-thought-out  substitution 
of  one  item  for  another,  may  mean  all  the  difference  between 
having  the  net  results  of  the  year's  operation  written  in  black 
figures,  or  in  red  figures. 

Change  Only  When  Necessary. — Do  not  misunderstand 
me.  It  is  the  greatest  of  folly  to  be  continually  changing 
items  unless  there  are  good  reasons  for  each  change.  If, 
however,  your  investigations  seem  to  prove  conclusively  that 


TEXTILE   PURCHASING    DIFFICULT        155 

a  change  should  be  made  in  a  material,  if  you  are  a  purchas- 
ing agent  possessed  of  the  amount  of  judgment  and  skill  you 
are  supposed  to  have,  you  can  place  those  facts  in  the  hands 
of  the  head  of  the  operating  department  in  such  a  manner 
that  he  will  not  only  feel  bound  to  accept  and  take  advantage 
of  the  information,  but  will  feel  indebted  to  you  for  helping 
him  locate  the  leak  before  it  was  brought  to  his  attention  in  a 
more  disagreeable  manner  by  some  higher  official. 

If  you  are  not  quite  sure  of  your  approach,  and  the  possi- 
ble reaction,  can  you  not  plan  your  campaign  so  that  it  will 
appear  that  the  discovery  is  not  yours,  but  that  of  the  oper- 
ating foreman?  It  may  not  at  first  glance  seem  right  or  fair 
that  another  man  should  be  deliberately  given  an  opportunity 
to  profit  by  your  work.  On  the  other  hand,  it  is  not  so  very 
important  who  receives  the  immediate  credit  for  effecting  a 
certain  given  economy,  as  long  as  the  firm  benefits  thereby. 

You  have  the  satisfaction,  the  experience,  and  the  added 
knowledge  gained  through  your  study  of  the  problem,  and 
when  the  directors  learn,  as  they  eventually  will  learn,  that 
these  economies  have  been  the  result  of  your  work  and  your 
knowledge,  your  position  will  be  very  much  stronger  than  it 
could  possibly  be  if  you  were  immediately  to  claim  every  jot 
of  credit  when  earned.  Sometimes  it  is  a  mighty  good  thing 
to  have  a  credit  balance  upon  which  you  can  draw,  if 
need  be. 

Two  Ways  of  Losing  Money. — It  is  nearly  as  common  to 
find  we  are  losing  money  through  the  use  of  material  not  good 
enough  for  the  purpose  to  which  it  is  put,  as  it  is  to  find  we 
are  using  material  that  is  better  than  needed.  The  continued 
use  of  any  material  that  is  not  under  the  existing  conditions 
best  fitted  to  a  particular  purpose,  results  in  a  money  loss  that 
cannot  easily  be  offset,  and  produces  an  economic  waste. 

This  does  not  mean  that  we  should  scrap  all  our  old  equip- 
ment as  soon  as  a  more  modern  type  is  available,  but  it  does 
mean  that  as  soon  as  more  modern  equipment  is  available,  we 
should  at  once  analyze  our  operating  conditions  to  determine 
whether  the  change  in  machinery  will  result  in  permanently 
lowered  costs,  or  whether  the  change  will  result  in  an  added 
burden  because  of  the  lack  of  demand  to  take  up  all  product 
of  the  new  machinery  at  a  profit.  If  new  machinery  will 
double  our  output,  but  the  market  will  not  absorb  the  addi- 
tional output  at  a  profit,  it  is  not  enough  to  lower  the  direct 
unit  cost. 


Chapter  XIX 

THE  PURCHASE  OF  ADVERTIZING 

Pay  the  Asking  Price. — Many  purchasing  agents  have  at 
various  times  been  called  upon  to  purchase  advertizing.  Some- 
times they  have  attempted  to  negotiate  the  purchase  of  adver- 
tizing space  much  as  they  would  attempt  to  purchase  a  car 
of  sugar,  or  a  car  of  steel.  The  scientific  purchase  of  adver- 
tizing, however,  requires  a  new  kind  of  purchase-technique. 
All  reputable  advertizing  mediums  protect  the  advertizing 
agencies,  and  no  reputable  advertizing  agency  will  split  a  com- 
mission with  any  client  under  any  circumstances.  In  this  par- 
ticular line  of  business  the  buyer  is  much  better  off  if  he  pays 
the  full  price  asked. 

In  the  purchase  of  advertizing  space,  the  purchasing  agent 
must  depend  a  great  deal  upon  the  assistance  and  advice  of 
the  agency  man.  If  he  tries  to  go  it  alone,  he  will  usually  find 
his  advertizing  appropriation  is  mostly  wasted.  All  well  estab- 
lished advertizing  mediums  have  a  fixed  rate,  which  is  pub- 
lished, and  distributed  freely  to  all  who  ask  for  it.  This  is 
the  price  asked,  and  is  the  price  the  advertizer  must  pay. 
Recognized  agencies  receive  an  agency  commission,  which  is 
usually  15  per  cent.  If  you  deal  with  the  advertizing  medium 
direct,  you  pay  the  same  amount  you  would  pay  the  agency, 
and  you  do  not  get  the  agency  service.  In  this  respect  there 
is  no  purchase-function  in  the  buying  of  advertizing  space. 
Once  the  medium  is  selected,  you  simply  pay  the  price  asked 
and  there  is  nothing  left  to  do  but  verify  the  fact  that  the 
advertizing  has  been  run,  and  see  that  the  bill  is  paid. 

Special  Training  Essential. — In  another  and  broader  sense, 
however,  the  purchase  of  advertizing  calls  for  a  type  of  pur- 
chase-function that  is  very  highly  specialized.  Just  as  it  is  the 
duty  of  the  purchasing  agent  to  see  that  the  materials  and 
supplies  that  he  purchases  are  the  supplies  and  materials  that 
are  best  suited  to  his  particular  plant,  it  is  the  duty  of  the 
buyer  of  advertizing  space  to  see  that  he  selects  the  sort  of 
medium  that  will  bring  in  the  greatest  number  of  inquiries 

156 


THE  PURCHASE   OF  ADVERTISING         157 

per  dollar  expended.  Moreover,  it  is  his  business  to  see  that 
these  inquiries  emanate  from  the  sort  of  prospective  customer 
who  is  able  and  willing  to  buy  the  sort  of  material  or  product 
he  is  trying  to  sell.  In  order  to  find  the  medium  that  will 
bring  in  the  greatest  possible  returns  per  dollar  expended,  it 
is  necessary  to  carefully  analyze  and  compare  the  circulation 
of  the  mediums  under  consideration.  Accurate  information 
concerning  the  circulation  of  periodicals  is  furnished  by  the 
American  Bureau  of  Audits  which  is  supported  jointly  by 
advertizers  and  publishers.  Dailies  are  required  by  law  to 
publish  semi-annual  affidavits  on  circulation.  No  one  who 
has  not  had  considerable  experience  selecting  and  testing  ad- 
vertizing mediums  and  interpreting  the  data  secured  can 
expect  to  do  this  satisfactorily  without  wasting  a  lot  of  time 
and  money. 

For  this  reason  it  is  folly  to  attempt  to  place  advertizing 
without  the  aid  and  counsel  of  a  competent  advertizing 
agency.  As  tlie  agency  is  interested  in  the  commissions  it  will 
earn,  and  as  these  commissions  will  grow  only  as  its  clients 
prosper,  it  is  to  the  best  interest  of  the  agency  to  work  for 
your  profit,  and  to  that  end  alone. 

Advertizing  is  such  a  broad  subject  that  we  cannot  hope  to 
more  than  cover  the  elements  in  a  discussion  of  this  sort. 
With  this  brief  introduction,  I  shall  next  describe  an  advertiz- 
ing campaign.  This  campaign  was  originally  drawn  up  in  the 
form  of  a  lecture  given  before  the  students  of  the  University 
of  Chicago  course  In  purchasing  by  Mr,  F.  D.  Mayer,  of 
Chicago. 

Buying  Advertizing  Space 

To  talk  intelligently  on  the  subject  "Buying  Advertizing 
Space"  would  necessitate  some  interrogation  on  my  part. 
First,  I  should 'have  to  know  what  kind  of  advertizing  you  are 
going  to  buy — newspaper,  magazine,  street  car,  billboard 
circularizing,  club  mailing,  telephone  canvass,  trade  papers, 
window  display,  or  moving  pictures.  Next,  the  agency  man 
must  know  for  what  purpose  you  wish  to  advertize — to  sell 
something,  or  to  buy  something. 

Buying  Is  Done  Easily. — If  It  Is  our  purpose  to  buy  some- 
thing, then  the  medium  to  be  used  Is  easily  selected,  because 
sellers  respond  quickly.  If  the  space  is  to  be  used  to  sell  some- 
thing, other  questions  must  be  answered.  There  is  the  ques- 
tion of  what  quantity,  and  the  answer  to  that  question  might 


158     PURCHASING  PRINCIPLES  AND  PRACTICES 

cause  us  to  decide  that  it  does  not  pay  to  advertize  tliat  com- 
modity. Advertizing  is  not  merely  buying  space,  as  we  shall 
show  from  the  following  hypothetical  case. 

Hypothetical  Problems  in  Advertizing. — Suppose  our  firm 
has  built  a  new  addition  to  the  factory,  and  we  want  to  move 
the  output  from  that  new  addition.  We  would  analyze  the 
situation  as  follows: 

1.  What  are  we  going  to  sell?  That  is  of  greatest 
Importance. 

2.  The  kind  of  package,  label,  container,  or  trade-mark. 
These  are  important  factors. 

3.  Will  the  "copy"  be  an  illustrative  appeal,  or  will  it  be 
argumentative? 

You  can  illustrate  cookies  by  the  expression  on  the  kids' 
faces,  but  it  takes  argument  and  comparisons  to  prove  the 
torsional  strength  of  a  14-inch  iron  beam. 

The  Artist  Must  Interpret. — Let  us  assume  that  our 
product  is  a  new  brand  of  condensed  milk.  That  calls  for 
educational  and  suggestive  copy.  That  means  we  will  have 
to  have  an  artist;  and  securing  the  services  of  an  artist  is  a 
bigger  job  than  appears  on  the  surface,  because  we  must  find 
just  the  artist  who  can  visualize  our  own  idea  of  what  this 
wonderful,  new,  improved,  last-word-in-perfection  condensed 
milk  is. 

Any  artist  can  draw  a  pretty  picture,  but  our  artist  must 
draw  into  this  particular  picture  or  series  of  illustrations,  the 
ideals  that  we  have  conceived  in  regard  to  this  new  brand  of 
milk. 

When  he  draws  a  picture  of  the  condensing  room,  he  must 
intuitively  feel  the  cleanliness  of  his  surroundings,  so  that  the 
illustration,  when  It  comes  before  the  public,  will  breathe 
wholesome,  sweet  cleanliness.  This  artist  must  be  able  to 
"sense''  our  enthusiasm,  and  every  picture  that  he  draws  must 
express  joy  by  reason  of  its  contact  with  the  "best  condensed 
mJIk  in  the  world,"  and  no  amount  of  exaggeration  will  show 
this  on  paper.  It  must  be  there  so  that  the  people  will  "feel" 
it  rather  than  "see"  it. 

The  Copy  Writer. — Next,  we  must  have  a  copy  writer,  the 
man  who  is  going  to  write  the  ads.  He  must  be  "sold"  on  the 
big  idea  of  the  wonderful  new  brand  of  condensed  milk  that 
we  are  going  to  put  out.  He  must  be  able  to  write  copy  that 
will  make  the  average  milk  consumer  think  of  our  particular 


THE  PURCHASE  OF  ADVERTISING  159 

brand  of  condensed  milk  every  time  he  sees  a  coffee  cup,  and 
he  must  be  able  to  write  convincing  copy  with  the  use  of  few 
words. 

You  may  be  able  to  find  this  artist  or  this  copy  writer  in 
the  office  of  some  reliable  advertizing  agency,  and  yet  you 
may  have  to  search  through  every  studio  and  university  in  the 
city  to  find  him — but  find  him  you  must.  Now,  we  are 
ready  to  analyze  the  demand  for  goods  of  this  character,  and 
from  two  angles :  ( 1 )  we  must  find  out  from  reports  which 
we  shall  be  able  to  secure  from  concerns  that  make  analyses 
and  investigations  of  this  kind,  the  number  of  brands  of  con- 
densed milk  there  are  on  the  market  at  the  present  time. 
They  will  also  tell  us  the  seasons  in  which  they  sell,  whether 
heavier  in  summer  than  winter,  and  in  what  localities.  They 
will  tell  us  the  lines  of  resistance,  etc.  (2)  We  may  find  that 
for  this  particular  article  it  is  necessary  to  create  a 
demand.  There  may  be  potential  possibilities  for  this  par- 
ticular kind  of  product,  but  the  public  has  not  yet  been 
educated  to  its  use. 

Preparation  of  Campaign. — Our  advertizing  campaign 
may,  therefore,  have  for  its  purpose  the  education  of  the  pub- 
lic to  the  use  of  this  kind  of  condensed  milk.  That  these 
things  can  be  done,  and  have  been  done,  is  best  shown  by  the 
grape  fruit  growers  of  this  country.  Seven  or  eight  years 
ago,  grape  fruit  was  not  popular,  but,  due  to  the  educational 
advertizing  campaigns  that  have  been  run,  the  grape  fruit  is 
now  as  popular  as  the  orange.  Next,  we  select  an  advertising 
agency,  if  that  was  not  the  very  first  thing  we  did;  and  then 
we  must  have  an  advertizing  appropriation.  The  question 
naturally  arises:  "How  much  shall  we  appropriate?"  We 
arc  marketing  a  new  article,  and  we  must  determine  what  the 
appropriation  shall  be.  We  proceed  to  fix  the  appropriation 
by  a  definite  process  of  analyzation,  not  by  guess  work,  and 
we  analyze  it  somewhat  in  this  manner: 

The  Appropriation. — Here  is  a  new  plant  with  a  possible 
output  of  so  many  cases  of  condensed  milk  per  month,  and 
per  year,  the  selling  price  of  which  amounts  to  $1,000,000 
per  annum.  Having  figured  the  cost  of  production,  and  the 
other  overhead  expenses,  etc.,  we  find  that  we  can  afford  to 
appropriate  for  advertising  10  per  cent,  of  the  grosj  sales,  or 
$100,000.  We  therefore  recommend  an  appropriation  of 
$100,000  for  the  new  condensed  milk  campaign.    We  purpose 


160    PURCHASING  PRINCIPLES  AND  PRACTICES 

selling  a  million  dollars'  worth  of  our  new  milk  at  a  cost  of 
$100,000.  Having  our  reports  before  us,  showing  existing 
conditions  in  all  parts  of  the  country,  we  start  to  analyze  the 
jobber  and  dealer  channel  through  which  this  new  line  of 
goods  is  going  to  reach  the  consumer. 

Wc  prepare  to  get  their  cooperation  by  circularizing. 

Reaching  Jobber  and  Dealer. — In  other  words,  we  send 
an  announcement  to  every  jobber  and  dealer  in  the  United 
States,  telling  him  that  we  are  preparing  a  tremendous  adver- 
tizing campaign  to  introduce  our  newest  and  greatest  product 
to  the  American  public.  Naturally,  we  recognize  the  jobber 
and  dealer  as  most  important  factors,  and  as  the  channels 
through  which  we  are  going  to  sell  our  product. 

Trade  Papers. — Soon  the  trade  papers  which  are  read  by 
the  dealers  and  jobbers,  announce  we  are  getting  ready  to  put 
on  the  market  a  wonderful  new  condensed  milk,  and  that  the 
advertizing  campaign  will  be  national.  A  little  later  full  page 
advertizements  begin  to  appear  in  the  trade  papers,  telling 
the  jobbers  and  dealers  that  the  company  will  soon  be  ready 
to  lay  its  plans  before  them. 

Next,  our  specialty  salesmen  go  on  the  road,  calling  on  the 
jobbers  and  dealers,  and  by  this  time  jobbers  and  dealers 
have  a  natural  curiosity  about  the  plans  which,  so  far,  have 
been  kept  very  secret.  In  order  to  take  these  jobbers  and 
dealers  into  our  confidence,  our  specialty  salesmen  are 
equipped  with  a  prospectus  containing  reproductions  or  proofs 
of  the  advertizements  that  are  going  to  appear  in  the  maga- 
zines, newspapers,  street  cars,  on  billboards,  etc. 

The  jobber  is  "taken  through"  the  campaign  in  this  man- 
ner, and  the  salesman  explains  as  he  goes  along  about  the 
wonderful  demand  that  is  going  to  be  created. 

Sales  Force.' — In  each  large  center,  a  distributing  jobber 
with  a  large  force  of  salesmen  will  be  established.  Our  own 
travelling  salesmen  meet  the  jobber's  salesmen  on  Saturday 
afternoon,  and  take  them  "through"  the  campaign,  explain- 
ing the  advertizing  methods  to  be  employed,  and  the 
wonderful  quality  of  the  milk. 

Soon  the  jobber's  salesmen  and  our  own  salesmen  are  call- 
ing on  the  dealers,  showing  them  reproductions  of  the  adver- 
tizements and  explaining  the  scheme  somewhat  as  follows: 

"Here  Is  a  reproduction  of  our  full  page  advertizements 
that  will  appear  In  the  'Saturday  Evening  Post,'  'Colliers,'  'Les- 


THE  PURCHASE   OF  ADVERTISING  161 

lies,'  'Literary  Digest,'  'Ladies'  Home  Journal,'  'Good  House- 
keeping,' 'Woman's  Home  Companion,'  'Modern  Priscilla,' 
'Cosmopolitan,'  'Munsey's,'  'American,'  etc.,  in  addition  to 
full  page  advertizements  in  your  own  local  newspapers.  Our 
national  advertizing  campaign  will  start  in  the  January  issues 
of  the  magazines.  These  will  all  be  in  the  hands  of  the 
readers  early  in  January. 

"Our  newspaper  advertizing  will  start  the  third  Saturday  in 
January,  There  will  be  full  page  advertizements,  which  will 
appear  in  the  evening  papers.  The  newspaper  advertizements 
will  repeat  the  'story'  that  has  been  appearing  in  the  weekly 
and  monthly  magazines,  and  will  call  attention  to  the  full 
page  advertizements  to  be  published  in  the  newspapers  on  the 
next  day — Sunday. 

"Particular  attention  will  be  called  to  the  fact  that  these 
Sunday  advertizements  will  contain  a  coupon,  good  for  one 
large  size  can  of  our  new  condensed  milk.  They  will  also 
carry  the  names  and  addresses  of  all  dealers  who  will  have 
stock  on  hand  with  which  to  fill  these  orders. 

"Naturally  you  will  want  to  have  your  name  in  the  Sunday 
advertizements.  First,  because  you  want  to  be  known  as  an 
up-to-date  dealer;  second,  because  you  want  your  customers 
to  bring  their  coupons  to  you  for  redemption.  The  manufac- 
turer in  turn,  will  redeem  these  coupons  from  you  at  the  regu- 
lar retail  selling  price  of  the  can  of  milk — 10  cents,  and,  of 
course,  to  meet  this  demand,  it  will  be  necessary  for  you  to 
have  a  stock  on  hand.  The  campaign  is  only  six  weeks  off; 
therefore,  I  will  take  your  order  now,  and  see  that  your  job- 
ber supplies  you  in  plenty  of  time  to  make  a  window  dis- 
play, and  to  have  the  merchandise  on  hand  with  which  to 
redeem   the  coupons." 

It  will  be  seen  that  by  this  method,  the  sales  at  wholesale 
all  over  the  country  could  approximate  $1,000,000  before 
one  advertizement  appeared  in  the  national  magazines.  Now, 
you  are  going  to  ask,  how  can  we  afford  to  print  a  coupon 
worth   10  cents  indiscriminately  in  newspapers? 

The  Coupon. — We  can  afford  to  print  this  coupon  in  the 
papers  for  the  following  reasons:  In  the  first  place,  you  will 
notice  that  I  specify  Sunday  newspapers.  Sunday  newspapers 
in  some  cities  sell  at  8  cents  each  and  in  most  towns  at  10 
cents  each,  therefore,  it  would  not  pay  to  buy  a  lot  of  papers 
just  for  the  coupon.     The  person  using  the  coupon  makes  a 


162     PURCHASING  PRINCIPLES  AND  PRACTICES 

statement  over  his  signature  that  he  has  received  the  can  of 
milk,  and  the  grocer  practically  makes  an  affidavit  that  he 
has  delivered  the  can  of  milk  to  him.  The  name  and  address 
of  the  party  to  whom  the  milk  has  been  delivered  is  on  the 
coupon. 

These  coupons,  when  they  come  back  for  redemption  are 
carefully  separated  into  zones  or  districts,  and  investigators 
are  employed  to  cover  certain  districts.  The  investigators 
report  to  the  main  office. 

The  investigator  may  call  on  a  grocer  in  his  district  and 
inquire  as  to  how  his  sales  are  proceeding.  He  asks:  "Is  the 
sale  repeating?"  If  "yes,"  "how  often"  ;  if  "no,"  "what  do  you 
think  is  the  reason?" 

First-Hand  Information. — He  may  find  that  Mrs.  Smith 
has  reported  that  the  milk  is  very  good,  but  that  it  ought  to  be 
put  up  in  smaller  size  cans,  because  there  are  only  two  in  her 
family,  and  one  can  lasts  two  days.  If  it  could  be  put  up  in 
smaller  size  cans,  so  she  could  open  a  can  a  day,  it  would  be 
more  convenient. 

This  is  valuable  information  for  the  sales  department,  and 
by  adding  a  smaller  size  package  to  the  line,  considerable 
sales  resistance  may  be  offset.  Much  valuable  information  Is 
secured  by  investigation. 

Various  follow-up  methods  are  used,  with  the  name 
secured  from  the  coupon  as  a  base.  A  letter  is  written  to  the 
customer,  thanking  her  for  having  accepted  our  invitation 
and  having  tried  the  milk.  She  is  asked  to  give  us  In  the  en- 
closed self-addressed  envelope,  her  opinion  of  this  new  milk. 
This  is  one  method  of  securing  a  lot  of  testimonials. 

The  Telephone  Canvass. — Next,  the  telephone  canvass 
may  be  employed.  The  names  on  the  coupons  are  carded, 
and  the  telephone  numbers  put  on  the  cards.  Young  ladies 
with  good  voices  are  employed  to  call  a  number,  and  proceed 
something  like  the  following: 

"Mrs.  Jones? 

"I  am  the  secretary  for  Mr.  Smith,  the  local  sales  manager 
of  the  Blank  Milk  Company.  A  short  time  ago,  you  were 
kind  enough  to  accept  our  invitation  to  try  a  can  of  our  milk, 
which  you  secured  from  your  grocer,  Mr.  Brown.  We  are 
making  every  effort  to  please  our  customers,  and  to  make 
friends  of  them. 

"I  am  therefore  calling  you  personally  to  Inquire  if  the  milk 


THE  PURCHASE   OF  ADVERTISING  163 

gave  entire  satisfaction,  and  if  there  was  anything  that  did 
not  meet  with  your  entire  approval. 

"Are  vou  continuing  to  use  our  product?" 

If  so,  '"Thank  you" ;  if  not,  "Why?" 

Perhaps  a  woman  demonstrator  may  be  sent  into  this  dis- 
trict to  follow  up  these  cases  of  dissatisfaction  and  show  "the 
lady  of  the  house"  how  to  use  this  milk  properly  and  why  it 
is  the  "best  in  the  world." 

The  Public  in  Action. — By  this  time  our  advertizing  has 
had  its  influence  upon  the  public.  Many  of  those  dealers 
who  refused  to  buy  in  the  beginning  when  our  specialty  sales- 
man called  on  them  are  now  telephoning  their  orders  to  the 
jobber,  not  because  they  want  to  handle  our  line  of  goods, 
but  because  the  dealers'  shelves  are  a  reflection  of  the  cus- 
tomers' demands. 

When  the  demand  has  been  created  on  the  part  of  the 
buying  public  for  a  certain  line  of  goods,  the  dealer  carries 
that  line  of  goods,  whether  he  will  or  not.  He  knows  from 
experience  that  a  customer  wants  what  he  wants  when  he 
wants  it,  and  if  this  particular  dealer  does  not  carry  what  the 
customer  wants,  the  customer  will  go  some  place  else,  and  the 
dealer  will  soon  be  out  of  business. 

Billboards. — In  our  campaign  of  advertizing  you  will 
notice  that  we  have  used  national  magazines  of  known,  proven 
worth,  both  monthly  and  weekly.  We  have  used  newspapers 
with  local  circulation  to  back  up  and  intensify  the  campaign. 
Now,  we  commence  to  use  street  cars  to  keep  the  name  con- 
stantly before  the  public,  and  our  newspaper  and  magazine 
advertizing  is  not  so  intensive.  Also,  we  are  using  billboards 
as  a  "string  around  her  finger,  lest  she  forget." 

For  instance,  your  mother  reads  our  advertizement  in  her 
favourite  woman's  magazine.  It  appeals  to  her,  and  she 
says:  "I  must  try  that  new  milk  sometime."  Then  she  turns 
the  page  to  something  more  interesting,  and  forgets  about 
the  new  milk.  Next  month,  she  sees  another  advertizement, 
and  says  to  herself:  "Oh,  yes,  I  had  intended  buying  some  of 
that  new  milk,  and  I  must  do  it.  Mrs.  Jones  spoke  about  it 
the  other  day,"  and  quickly  she  forgets  again. 

Then  she  sees  our  newspaper  announcements  in  her  home 
town  paper,  and  decides  the  next  time  she  goes  out,  to  buy  a 
can  of  that  new  milk,  but  the  next  time  she  goes  out  she  for- 
gets again.     Today  she  has  been  down  town. 


1 64     PURCHASING  PRINCIPLES  AND  PRACTICES 

On  her  way  home  from  the  trani,  she  sees  a  billboard  or  a 
wall  sign  that  calls  her  attention  to  our  milk,  and  she  snaps 
her  finger  and  says,  "Oh,  yes,  now  I  must  buy  that  milk  on 
my  way  home." 

The  chances  are  she  is  passing  a  grocery  store  just  about 
the  time  she  sees  the  sign,  because  the  signs  have  been  stra- 
tegically placed  in  the  home  neighbourhoods.  She  goes  into 
the  store,  buys  a  can  of  the  new  milk,  and  proves  that  "it 
pays  Lo  advertize." 


Chapter  XX 

PROBLEMS  IN  COPPER  AND  BRASS' 

World  Production  Erratic. — Since  the  earliest  develop- 
ment of  the  human  race,  mining  and  smelting  of  copper  has 
been  known  and  practiced.  Egyptian  ruins  dating  back  as 
far  as  4500  B.  C.  have  been  found  to  contain  implements 
made  of  copper.  The  hieroglyphics  of  the  period  3500  to 
2500  B.  C.  show  that  the  crucible  or  melting-pot  was  used  as 
a  symbol  for  copper.  Bronzes  manufactured  about  2700 
B.  C.  have  been  found,  and  the  composition  of  these  was 
found  to  be  held  to  the  formula  88  of  copper  and  12  of  tin, 
with  remarkable  accuracy. 

During  the  years  Intervening  between  those  dark  ages  and 
the  present  time,  the  uses  for  copper  and  Its  alloys  have  been 
greatly  extended,  and  the  methods  of  mining,  smelting  and 
refining  Improved  to  a  marked  degree. 

The  world's  production  and  consumption  of  copper  have 
been  so  erratic  and  abnormal  since  1914  that  accurate  data 
Is  unobtainable.  That  America  predominates  In  the  world's 
production  of  copper  Is,  however,  Indicated  by  the  fact  that 
a  few  years  ago,  when  the  world's  normal  annual  consump- 
tion was  2,000,000,000  pounds,  American,  refineries  were 
producing  annually   1,450,000,000  pounds. 

Slump  from  War  Activity. — The  1920  production  was  ap- 
proximately 1,560,000,000  pounds,  which  Is  only  about  half 
the  amount  produced  per  annum  during  the  war.  To  dispose 
of  this  country's  normal  copper  production,  daily  sales  must 
average  about  5,000,000  pounds.  A  carload  of  copper  Is 
really  a  retail  term;  100,000  pounds  Is  a  relatively  small  unit; 
a  million-pound  lot  Is  ordinary  In  periods  of  activity,  and 
transfers  of  much  larger  blocks  are  common. 

Even  when  the  market  Is  classed  as  dull,  the  weekly  busi- 
ness  amounts  to  many  millions  of  pounds.     A  single  large 

*  Prepared  by  J.  P.  Davis,  assistant  to  the  president,  Belden  Manufacturing 
Co.,  Chicago,  and  by  an  official  of  a  large  brass  company,  whose  name  is 
omitted   at  tiis   request. 

165 


166     PURCHASING  PRINCIPLES  AND  PRACTICES 

electrical  manufacturer  recently  made  a  single  purchase  of 
40,000,000  pounds  of  copper. 

Although  copper  has  been  known  and  used  since  remotest 
times  (records  indicating  that  it  was  the  first  metal  in  com- 
mon use),  some  of  the  richest  copper  deposits  of  the  world 
have  been  discovered  within  the  last  75  years.  The  first  cop- 
per mine  in  the  New  World  to  be  worked  by  white  men  was 
El  Cobre  near  the  city  of  Santiago,  Cuba.  It  had  supplied 
the  aborigines  many  centuries,  and  was  a  heavy  producer  dur- 
ing the  World  War.  Copper  was  mined  in  the  Colonial 
times  in  Connecticut,  New  Jersey,  Pennsylvania,  and  Mary- 
land. The  first  mine  worked  in  the  United  States  was  the 
Simsbury  Mine,  at  Granby,  Conn.  The  record  of  this  mine 
extends  back  to  the  year  of  1705.  It  was  worked  until  1780, 
but  was  not  profitable,  and  only  a  small  quantity  of  ore  was 
taken  out. 

Sources  of  American  Copper. — The  first  important  Lake 
Superior  mine  was  the  Cliff,  which  began  shipping  in  1846, 
followed  by  the  Minnesota  in  1847,  and  then  by  the  Central, 
Phoenix,  National,  and  others.  These  mines,  with  the  excep- 
tion of  the  Minnesota,  are  now  exhausted,  however. 

In  1864,  the  Calumet  lode  was  discovered,  and  in  1866  the 
Calumet  Mine  was  opened.  This  consolidated  with  the  Hecla 
n  1871  as  the  Calumet  &  Hecla,  and  began  its  wonderful 
career.  Between  1870  and  1893  this  mine  produced  more 
than  half  the  output  of  Michigan,  reaching  a  maximum  in 
1898  of  98,000,000  pounds  of  refined  metal  and  it  was  for 
years  the  largest  copper  producer  in  the  world.  Some  of 
the  shafts  in  these  mines  are  down  more  than  6,000  feet. 

The  ore  from  which  refined  copper  is  obtained  is  now  pro- 
duced in  various  parts  of  the  United  States,  although  it  still 
comes  principally  from  the  northern  peninsular  of  Michigan, 
Montana,  Arizona,  New  Mexico,  and  some  other  Southwest- 
ern States.  The  method  of  ore  treatment  differs  greatly 
according  to  the  characteristics  of  the  raw  material. 

Methods  of  Ore  Treatment. — In  the  northern  peninsula  of 
Michigan,  the  Calumet  &  Hecla  mines  ore  contains  large 
amounts  of  free  copper,  and  their  processes  of  smelting  and 
refining  are  therefore  quite  simple. 

The  Anaconda  mines  of  Montana  produce  ores  which  con- 
tain large  amounts  of  iron,  manganese,  arsenic  and  sulphur, 
and  they,  therefore,  put  most  of  their  materials  through  a 


PROBLEMS  IN  COPPER  AND  BRASS         167 

rather  elaborate  process  in  order  to  eliminate  these  impuri- 
ties. Some  of  the  largest  producers  of  the  Southwest 
use  quite  simple  methods,  because  their  ores  are  easily  soluble 
in  sulphuric  acid,  and  it  is  only  necessary  for  them  to  leach 
the  raw  material  for  a  short  time,  and  then  plate  out  the  cop- 
per by  the  electrolytic  method.  The  New  Cornelia  mine, 
which  is  one  of  the  cheapest  producers  of  copper  in  the  coun- 
try, maintains  eight  leaching  vats,  each  of  which  will  hold 
15,000  tons  of  ore. 

More  Precious  Metals  Saved. — Modern  electrolytic  meth- 
ods make  possible  the  saving  of  the  more  precious  metals 
found  in  the  copper  ore,  with  the  additional  advantage  that 
a  much  purer  copper  is  obtained.  The  mineral  which  cannot 
be  profitably  leached  by  sulphuric  acid  is  treated  first  in  a 
melting  furnace,  the  flame  passing  from  the  fire  box  over  the 
copper,  under  a  low  arched  roof  with  a  stream  of  air  brought 
in  from  below.  This  is  an  oxidizing  process  and  the  slag 
that  separates  from  the  copper  Is  drawn  off  from  the  surface. 

After  the  removal  of  the  slag,  charcoal  is  thrown  on  top  of 
the  melted  copper  and  the  liquid  mass  Is  agitated  by  the  in- 
sertion of  green  poles  of  hard  wood  ("poling").  The  Igni- 
tion of  these  poles  and  the  charcoal  produces  the  carbon  that 
takes  up  the  oxygen  in  the  copper,  thus  changing  the  action 
of  the  furnace  from  an  oxydlzing  to  a  reducing  process.  This 
is  often  preceded  by  blowing  air  through  the  moulten  copper. 
The  copper  Is  tested  by  dipping  small  buttons  of  the  moulten 
mass  in  a  trial  ladle  from  time  to  time.  If  the  copper  sets 
with  a  level  surface,  the  process  of  poling  is  considered  com- 
pleted, and  the  copper  Is  run  out  into  molds. 

The  Slag  Remelted. — The  slag  from  the  melting  furnace 
is  broken  up  and  taken  to  a  blast  furnace,  or  cupola,  where  It 
is  remelted.  The  process  is  substantially  the  same  as  the 
process  in  the  melting  furnace,  except  that  limestone.  Iron, 
or  silica  are  added  to  form  a  proper  mixture  for  fusing,  and 
to  aid  in  the  proper  separation  of  the  copper.  The  relative 
amounts  of  the  several  materials  to  be  added  depend  upon 
the  analysis  of  the  copper  and  slag  mixture.  All  of  the  ingredi- 
ents are  mixed  with  anthracite  coal,  with  or  without  coke,  and 
a  blast  of  cold  air  is  forced  up  through  the  bottom  of  the 
mass.     The  copper  drops  to  the  bottom  and  Is  drawn  off. 

This  copper  still  contains  a  large  amount  of  impurities, 
however,  and  must  be  refined  separately.    In  practice  the  slag 


168     PURCHASING  PRINCIPLES  AND  PRACTICES 

copper  is  poured  into  Ingots  or  ingot  bars,  but  never  into  wire 
bars. 

Final  Refining  Process. — After  the  copper  is  smelted  and 
somewhat  purified,  it  is  given  a  final  refining  operation.  The 
great  bulk  of  refined  copper  is  produced  by  the  electrolytic 
process.  The  crude  copper  is  first  melted  and  cast  into  the 
form  of  anodes.  These  anodes  are  suspended  in  a  solution 
of  sulphuric  acid,  and  the  copper  is  plated  on  to  the  cathodes. 
During  this  plating  operation,  the  gold,  silver,  arsenic,  iron, 
and  small  amounts  of  rarer  metals  and  other  impurities  fall 
to  the  bottom  of  the  tank  in  the  form  of  sludge.  This  sludge 
is  later  refined  and  the  valuable  metals  reclaimed. 

The  copper  cathodes  produced  by  this  method  are  very 
pure,  and  will  run  about  99.98  per  cent.  Because  the  cathodes 
are  rather  brittle,  they  are  not  used  commercially,  but  are 
melted  up  and  cast  into  the  forms  which  are  adaptable  to 
rolling  mill  and  casting  shop  work.  These  forms  are  ingots, 
wedge  cakes,  wire  bars,  billets  and  some  special  shapes. 

Impurities  in  Wire  Bar. — The  principal  impurities  found  in 
the  wire  bar  are  shown  in  the  following  analyses  by  the 
United  States  Bureau  of  Standards,  representing  about  40 
samples  from  various  companies: 

Elements  Percentages 

Copper   99.91 

Silver 03 

Oxygen    .052 

Arsenic 002 

Antimony .002 

Sulphur .002 

Iron    002 

Nickel Trace 

Lead     . . Trace 

Zinc Trace 

Arsenic  is  very  Injurious  to  copper  for  electrical  purposes. 
Careful  refining  is  necessary  as  .07  of  1  percent,  of  arsenic 
In  copper  will  reduce  its  conductivity  25  percent.  A  proper 
percentage  of  arsenic  tends  to  toughen  and  Improve  copper 
for  other  classes  of  work. 

Wire  Drawing,  and  Sizes. — Wire  bars,  which  are  used  for 
drawing  down  to  wire  of  various  sizes,  are  usually  long,  of 
square  cross  section,  tapering  at  one  end  to  facilitate  the  pas- 
sage through  the  master  rolls  of  the  wire  mill.  This  is  the 
first  process  of  making  wire.    After  several  passages  through 


PROBLEMS  IN  COPPER  AND  BRASS         169 

the  rolls  the  copper  is  started  through  a  series  of  dies  in 
order  to  produce  the  smaller  sizes  of  wire.  While  the  wire 
is  still  large  size,  chilled  iron  dies  are  used,  but,  as  the  wire 
becomes  finer,  diamond  dies  set  in  steel  must  be  substituted. 

Sizes  of  copper  wire  are  computed  in  Browne  &  Sharpe 
gauge;  the  finer  the  wire  the  higher  the  number  of  the  gauge. 
For  instance,  No.  8  wire  is  very  heavy,  being  of  .1273-inch 
minimum  diameter  and  .1298-inch  maximum,  while  No.  40  is 
.003-inch  minimum  and  .0032  maximum  diameter. 

Electrolytic  copper,  which  is  used  for  wire,  is  soft-drawn 
and  comes  in  both  bright  and  dull  finish.  The  temper  and 
finish  is  modified  by  means  of  annealing.  Both  the  water  and 
air  process  of  annealing  are  used. 

Wires  for  Insulation. — Usually  when  the  wire  is  to  be  in- 
sulated with  a  textile  such  as  cotton  or  silk,  the  dull  finish  is 
used,  because  the  brighter,  smoother  wire  does  not  permit  the 
insulation  to  adhere  so  closely. 

Copper  wire  which  is  to  be  rubber-covered  is  first  tinned, 
by  passing  it  through  a  solution  of  melted  tin,  and  then  wiping 
it  clean  with  cotton  or  asbestos  wicking.  This  coating  of  tin 
is  so  slight  that  the  diameter  of  the  wire  is  not  perceptibly 
changed.  Wire  which  is  to  be  rubber-covered  must  first  be 
tinned  because  the  sulphur  in  the  rubber  has  a  chemical 
action  on  copper,  but  not  upon  tin. 

Ordering  Copper  Wire. — The  following  is  a  typical  speci- 
fication for  copper  wire  for  manufacturing  purposes: 

1.  All  copper  wire  furnished  must  be  of  uniform  diameter 
throughout,  of  circular  cross  section. 

2.  Conductivity  must  be  equal  to  or  greater  than  98 
per  cent  of  the  conductivity  of  the  pure  copper. 

3.  Wire  heavier  than  No.  30  B.  &  S.  gauge  must  be 
drawn  within  the  limits  of  1  per  cent  above  and  1  per  cent 
below  the  specified  gauge. 

4.  Wire  from  No.  30  to  No.  40  B.  &  S.  gauge  must  be 
drawn  within  the  limits  of  1/10  per  cent  below  or  1/10 
per  cent  above  the  specified  gauge. 

5.  Spools  must  be  evenly  wound  and  not  overwound;  the 
ends  must  be  firmly  fastened  so  as  to  prevent  the  wire  con- 
tained from  becoming  loosened  or  uncoiled. 

6.  Each  spool  must  contain  one  piece  of  wire  only. 

Lake  and  Electrolytic  Copper. — Lake  copper,  as  the  name 
indicates,  is  produced  by  mines  in  the  Lake  Superior  district. 


170     PURCHASING  PRINCIPLES  AND  PRACTICES 

During  the  last  twenty  years  electrolytic  has  largely  displaced 
lake  copper  for  electrical  work.  Electrolytic  Is  now  con- 
ceded by  many  to  be  superior  to  lake  copper  in  conductivity. 
The  production  of  electrolytic  copper  now  amounts  to  about 
80  per  cent  of  the  total  American  production  and  from  70 
per  cent  to  75  per  cent  of  the  world's  produciton.  When  cop- 
per is  referred  to  without  qualification,  the  common 
understanding  Is  that  electrolytic  is  meant. 

The  standard  specifications,  approved  February  18,  1910, 
provide  that  all  wire  bar  and  pig  copper  shall  have  a  purity  of 
99.9  per  cent,  silver  being  counted  as  copper. 

Sales  to  the  Consumer. — A  few  of  the  producers  sell  the 
product  of  their  own  refineries  only,  and  sell  this  direct  to  the 
consumer,  while  other  producers  sell  not  only  their  own 
product,  but  also  act  as  selling  agents  for  other  refineries  that 
do  not  sell  direct  to  the  consumer.  Thus  the  Calumet  & 
Hecla  Co.  sell  the  product  of  other  lake  companies  of  which 
it  is  a  stockholder;  the  Anaconda  Copper  Mining  Co.,  one 
of  the  big  earning  companies,  now  sell  direct,  although  for- 
merly It  sold  through  the  United  Metals  Selling  Co. 
Phelps,  Dodge  sell  the  Calumet  and  Arizona  brands,  while 
the  American  Smelting  &  Refining  Co.  sell  the  output  of  the 
Utah,  Nevada,  Ray,  Chino,  and  Tennessee  mines.  The  com- 
mission rate  for  selling  copper  Is  usually  1  per  cent.  The 
large  companies  mentioned  above  are  known  to  buyers  of 
copper  as  "first  hands,"  and  the  "second  hands"  are  those 
that  deal  only  on  a  brokerage  basis. 

Production  Costs  Vary. — It  is  difficult  to  secure  definite 
data  on  the  cost  of  producing  copper,  and  it  varies  greatly 
with  different  mines,  but  it  is  generally  conceded  that  the  price 
of  copper  in  1920,  approximately  13^  cents  a  pound,  is  un- 
der the  cost  of  production  In  all  but  the  most  efficient  mines. 
As  usual  during  a  receding  market,  the  copper  business  has 
been  none  too  brisk,  and  many  of  the  big  companies  have  been 
forced  to  sell  copper  at  less  than  cost  of  production.  The 
falling  market  makes  It  unprofitable  for  many  of  the  mines  to 
operate.  This  in  turn  curtails  the  supply,  and  will  result  in 
higher  prices  or  lower  costs. 

Hot  and  Cold  Rolled  Sheets. — Sheet  copper  is  produced 
by  heating  the  wedge  cakes  or  flat  cakes  to  a  temperature  of 
approximately  900  degrees  C,  and  reducing  the  thickness 
of  the  cakes  by  successive  passes  through  the  rolls.     Finished 


PROBLEMS  IN  COPPER  AND  BRASS         171 

sheet  copper  is  of  two  qualities,  known  as  "hot  rolled,"  and 
"cold  rolled."  Hot  rolled  copper  is  finished  to  size  by  roll- 
ing in  packs,  and  performing  the  operation  while  the  copper  is 
hot.  This  gives  a  finished  product  which  is  not  so  accurate  to 
gauge,  and  does  not  have  the  smooth,  even  surface  of  cold 
rolled.  Cold  rolled  sheets  are  finished  from  about  .150 
inch  by  rolling  cold  and  in  single  sheets.  This  produces  the 
very  best  quality  of  copper  sheet,  which  is  used  for  spinning, 
wash  boiler  manufacture,  reflector  stock,  engravers'  plates, 
and  the  like. 

Three  Processes  for  Tubes. — Copper  tubes  are  manufac- 
tured by  three  methods,  the  most  common  of  which  is  the 
Mannesmann  process.  In  this  machine  a  solid  copper  billet 
is  spun  and  pierced  in  such  a  way  that  a  rough  tube  is  formed. 
After  this  first  forming  operation,  the  piece  is  drawn  on  a 
plug  and  through  a  die  until  the  size  desired  is  obtained. 
Copper  tubes  are  also  made  by  casting  large,  hollow  cylinders 
and  gradually  reducing  these  cylinders  through  dies  until  the 
finished  size  is  reached.  The  third  method  is  to  cut  a  large, 
round  disc  from  a  sheet  of  copper,  and  then  to  cup  it  on  a 
large  punch  press.  These  cups  are  passed  through  successive 
operations  until  they  form  long  cylinders  closed  at  one  end. 
The  closed  end  is  then  cut  off  and  the  cylinder  so  formed  is 
drawn  on  a  plug  and  through  a  die  until  it  has  reached  the 
desired  size. 

Purity  an  Essential. — In  order  to  fulfill  its  purposes  in 
commerce,  copper  must  be  of  the  very  highest  quality.  No 
copper  in  any  form  is  accepted  by  the  best  manufacturers 
until  it  has  been  subjected  to  chemical  and  electrical  tests. 
The  purity  of  the  material  must  exceed  98.90  per  cent,  and 
the  electric  conductivity  must  be  over  99  per  cent.  Every  step 
in  the  production  of  copper  must  be  very  closely  checked  by 
the  most  modern  technical  methods;  the  annealing  of  the 
material  between  successive  operations  must  be  accurately 
controlled,  and  the  strength  of  the  pickling  solutions  must  be 
exact. 

Brass  an  Alloy  with  Zinc. — Brass  is  an  alloy  of  copper 
and  zinc  mixed  in  varying  proportions.  Commercial  brass 
consists  of  mixtures  varying  from  95  per  cent  copper  and 
5  per  cent  zinc  down  to  60  per  cent  copper  with  40  per 
cent  zinc. 

Brass  is  what  is  known  as  a  "solid  solution,"  i.  e.,  the  zinc 


172     PURCHASING  PRINCIPLES  AND  PRACTICES 

is  so  dissolved  in  the  copper  during  the  melting  operation  that 
in  the  finished  product  it  is  impossible  to  distinguish  either 
copper  or  zinc  under  the  finest  microscope.  To  illustrate,  take 
a  cup  of  hot  water,  add  a  teaspoonful  of  sugar,  and  stir  the 
mixture  until  all  the  sugar  is  dissolved.  When  cooled,  we 
have  a  clear  liquid  in  which  it  is  impossible  to  see  any  sugar. 
This  is  the  way  zinc  is  dissolved  in  copper. 

Lead  and  copper  do  not  alloy  in  this  way,  but  form  what  is 
known  as  a  mechanical  mixture.  As  an  example  of  this,  let 
us  take  a  cup  of  hot  water  and  a  teaspoonful  of  sand.  If  we 
stir  the  sand  thoroughly  It  becomes  disseminated  throughout 
the  water,  but  if  we  cease  stirring  and  permit  the  mixture  to 
stand  for  a  few  moments,  the  sand  will  immediately  settle  out 
to  the  bottom  of  the  cup.  The  only  way  we  could  hold  the 
sand  evenly  distributed  throughout  the  water  would  be  to 
freeze  the  mixture  at  the  exact  moment  it  was  well  stirred. 

Many  Varieties  of  Brass. — As  stated  before,  common 
brass  contains  only  copper  and  zinc,  but  for  special  purposes, 
other  materials  are  added  to  the  brass.  Lead  is  added  to  give 
free  cutting  qualities;  tin  is  added  so  that  the  material  will 
resist  corrosion,  and  to  increase  the  hardness  when  rolled; 
nickel  is  added  to  produce  the  well  known  white  metal, 
"nickel  silver." 

It  Is  Impossible  in  the  space  available  to  list  the  many  quali- 
ties which  may  be  obtained  by  changing  the  mixture  and  the 
temper  of  brass,  in  order  to  best  adapt  it  to  special  uses. 

Profit  by  Experience. — Each  problem  that  presents  itself 
to  the  manufacturer  should  be  taken  up  In  detail  with  the 
brass  maker  in  order  to  profit  by  his  experience  and  to  secure 
aid  In  drawing  up  the  specifications  for  the  material  desired. 
Even  in  a  given  alloy,  the  tempers  which  may  be  obtained  are 
numerous,  and  each  one  is  best  suited  for  a  certain  purpose. 

For  example,  sheet  brass  may  be  obtained  in  reflector  an- 
neal, light  anneal,  drawing  anneal,  soft  anneal  and  dead  soft 
anneal;  cold  rolled  temper,  quarter  hard,  half  hard,  hard, 
extra  hard,  and  spring.  For  some  purposes  common  hard 
brass  in  one  of  the  above  tempers  may  be  entirely  satisfactory; 
at  other  times  a  mixture  richer  In  copper  may  be  necessary, 
so  that  the  sheet  metal  will  withstand  drastic  drawing  opera- 
tions, and  will  not  show  a  tendency  to  "season  crack." 

"Season  Cracking"  Explained. — "Season  cracking"  Is  a 
defect  which  should  be  thoroughly  understood  by  all  users  of 


PROBLEMS  IN  COPPER  AND  BRASS         173 

brass.  A  more  proper  expression  might  be  "corrosion  crack- 
ing," because  "season  cracking"  is  not  possible  without  corro- 
sion. The  cause  of  the  troublesome  defect  is  as  follows: 
When  the  sheet  metal  is  drawn  unevenly,  a  condition  of  strain 
is  set  up  in  the  metal.  If  metal  in  this  condition  is  placed  in 
an  atmosphere  of  corrosive  gas,  or  is  attacked  by  any  cor- 
rosive solution,  the  surface  of  the  material  becomes  etched, 
and  thin  spots  develop.  As  this  corrosion  progresses,  the 
strains  in  the  metal  become  greater  than  the  tensile  strength 
of  the  metal  in  the  thin  spot,  and  rupture  follows. 

It  is  of  the  greatest  importance  that  the  brass  mill  should 
know  for  what  purpose  its  materials  are  being  used.  The 
close  cooperation  between  purchasers  and  manufacturers 
would  eliminate  many  present  day  troubles. 

New  Uses  for  Copper  and  Brass. — During  the  war,  when 
prices  were  high,  steel  came  into  use  for  many  of  the  parts 
previously  made  from  copper  and  brass;  but  now  that  prices 
are  seeking  their  normal  level,  there  seems  to  be  again  a 
tendency  to  use  copper  and  brass  for  many  purposes,  both  old 
and  new.  The  ease  with  which  they  are  worked,  and  their 
resistance  to  rust,  are  characteristics  much  in  their  favour.  We 
believe  that,  with  the  realization  of  all  the  benefits  to  be  ob- 
tained, there  will  be  a  constantly  increasing  market  for  copper 
and  brass  materials. 

The  reported  discovery  of  a  new  method  of  tempering 
copper  for  tool  and  die  work  opens  up  a  new  and  very  inter- 
esting and  profitable  field  for  the  producer  and  consumer  of 
copper  and  brass  and  their  alloys. 


Chapter  XXI 

PURCHASE  OF  MACHINERY  AND  MINE 
EQUIPMENT 

Quality  Must  Come  First. — In  buying  machinery  and  sup- 
plies for  a  mining  company,  whether  the  product  be  copper, 
iron  ore,  lead,  zinc  or  some  other  metal,  the  two  prime  con- 
siderations are  the  quality  of  the  goods  and  the  reliability  of 
the  vendor.     After  these  come  price  considerations. 

The  experiences  of  buyers  for  the  large  mining  companies 
of  the  country  prove  that  the  best  article  of  any  kind,  whether 
the  cheapest  or  not  in  price,  is  the  only  one  to  consider.  It 
must  not  be  inferred  that  little  attention  should  be  paid  to 
price.  On  the  contrary,  the  amount  paid  each  year  for  equip- 
ment and  supplies  is  a  very  important  factor  in  the  unit  cost 
of  production,  but  the  quality  of  the  material  must  come  first. 
Mining  companies  do  not  buy  raw  materials  for  resale,  but 
for  their  own  use,  and  the  question  of  replacement  is  one  that 
they  cannot  afford  to  have  come  up  very  often. 

Making  sure  that  the  source  of  supply  is  reliable  should 
become  a  matter  of  routine,  but  many  buyers  often  neglect 
or  lose  sight  of  this  matter.  Only  when  they  find  it  necessary 
to  file  claims  for  shortages,  imperfect  packing,  delays  of  vari- 
ous kinds,  and  the  like,  is  that  class  of  purchaser  brought  to  a 
realization  of  the  importance  of  reliability.  This  phase  of 
the  purchasing  agent's  work  is  brought  out  prominently  in 
buying  heavy  machinery  for  mining  work.  Here  no  chances 
can  be  taken.  Mistaken  economy  may  cause  great  losses  in 
time,  money  and  in  lives. 

It  would  be  impossible  to  cover  in  one  chapter,  the  whole 
field  of  the  purchase  of  mine  machinery,  so  only  three  of  the 
principal  classes  will  be  discussed  here;  namely,  rock  drills, 
to  break  up  the  rock;  hoisting  engines,  to  raise  it  to  the 
surface;    and   lathes,    to   keep  up    repairs. 

Rock  Drills. — As  one  manufacturer  of  rock  drills  says,  "The 
art  of  drilling  rock  has  reached  such  a  state  of  efliiciency  that 
the  manager  of  a  project  involving  different  kinds  of  work 
usually  employs  a  different  type  of  drill  for  each  kind."     The 

^  By  F.   J.   Nicholas,   Purchasing  Agent,    Calumet  &   Hecla   Mining   Co.     and 
allied   companies,   Calumet,   Houghton   County,   Michigan. 

174 


PURCHASE  OF  MINE  EQUIPMENT         175 

IngersoU-Rand  Co.,  of  New  York  City;  the  Sullivan  Machin- 
ery Co.,  of  Chicago,  and  the  Denver  Rock  Drill  &  Manufac- 
turing Co.,  of  Denver,  all  of  which  have  offices  in  the  principal 
cities  of  the  world,  are  three  of  the  most  prominent  manufac- 
turers of  rock  drilling  machinery.  The  purchaser  may  safely 
entrust  his  problems  with  them,  or  for  that  matter,  with  a 
number  of  other  like  concerns;  for  it  is  neither  satisfactory 
nor  profitable  to  sell  a  drill  unsuited  to  the  work  in  hand. 
Improvements  are  continually  being  made  on  rock  drills,  just 
as  on  other  kinds  of  machinery.  Some  of  the  factors  to  be 
considered  in  the  purchase  of  rock  drills  are  as  follows: 

1.  The  Nature  of  the  JVork  to  Be  Performed,  i.e., 
whether  sinking,  drifting,  raising  or  stoping.  It  also 
makes  a  difference  whether  the  holes  are  to  be  drilled  in  cop- 
per-bearing rock,  like  the  conglomerate  or  amygdaloid  veins 
of  Lake  Superior,  or  in  rock  carrying  silver,  lead  or  zinc. 
When  sinking,  it  will  often  be  found  preferable  to  use  a 
heavy  type  of  drill  that  is  set  up  on  a  tripod,  rather  than  the 
lighter  drills  commonly  used  in  stoping,  raising  or  drifting, 
which  are  set  up  on  posts. 

2.  Speed  of  Drilling. — This  depends  usually  on  whether 
the  cost  of  operation  or  the  time  element  is  forecast.  If 
the  work  is  in  a  mine  producing  12  months  in  the  year,  the 
machine  that  will  drill  the  most  footage  at  the  lowest  cost  will 
probably  be  selected.  On  the  other  hand,  if  the  job  is  a  tun- 
nel which  must  be  completed  within  a  certain  time,  then  cost 
will  be  placed  secondary  to  speed. 

3.  Cost  of  Upkeep. — The  value  of  a  drill  depends  to  a 
great  extent  on  the  number  of  times  per  year  it  must  be 
brought  up  to  the  surface  for  overhauling  or  repairs,  or 
rather,  upon  the  rarity  of  the  occasions.  This  doesn't  mean 
much  in  an  open  pit  or  a  shallow  mine,  but  it  does  mean 
something  when  the  drill  must  be  carried  through  a  drift 
several  thousand  feet  to  the  shaft,  and  then  up  from  5,000 
feet  to  6,000  feet,  as  is  common  in  many  copper  mines. 

4.  Weight  of  Machine. — Until  recent  years  the  common 
rock  drill  weighed  between  300  and  400  lbs.,  making  it  a  two- 
man  job  to  handle  and  operate.  Now  this  weight  drill  is  sel- 
dom seen,  as  the  one-man  machine  of  90  to  150  lbs.  has 
taken  its  place.  As  the  smaller  machines  will  drill  just  as 
many  feet  as  the  larger  type,  the  saving  in  labour  of  handling 
is  important. 


176     PURCHASING  PRINCIPLES  AND  PRACTICES 

5.  Simplicity  of  Operation. — A  man  may  be  an  expert 
miner,  but  a  poor  mechanic.  Therefore,  the  drill  that  is  made 
of  the  smallest  number  and  of  the  simplest  parts  will  appeal 
to  the  operator,  as  it  is  less  liable  to  get  out  of  order  and 
interfere  with  his  earning  capacity. 

6.  Opportunities  for  Demonstration. — Most  manufactur- 
ers will  gladly  demonstrate  their  drills  by  placing  one  or  more 
in  the  service  of  the  operator.  The  results  so  obtained,  plus 
the  criticisms  and  suggestions  from  the  mine  superintendents 
and  efficiency  men,  prove  of  much  value  to  all  concerned. 
Manufacturers  of  rock  drills  will  usually  meet  the  prospective 
purchaser  more  than  half  way  in  matters  of  this  kind. 

Hoisting  Engines.' — No  part  of  a  mine's  equipment  is  of 
greater  importance  than  the  hoist.  For  development  work, 
or  for  sinking  the  first  few  hundred  feet  from  the  surface,  any 
standard  hoisting  engine  of  12  to  100  horse  power,  such  as 
those  used  by  building  contractors  and  quarrymen,  will  serve. 
These  may  be  of  single  drum  or  double  drum  type,  with  boiler 
attached,  or  power  may  be  supplied  from  a  central  station. 

There  are  a  number  of  concerns,  like  the  Nordberg  Manu- 
facturing Co.  and  the  Allis-Chalmers  Manufacturing  Co., 
both  of  Milwaukee;  the  Lidgerwood  Manufacturing  Co.,  of 
New  York  City,  and  the  American  Hoist  &  Derrick  Co.,  of 
St.  Paul,  that  make  specially  designed  hoists  for  hard  service 
and  for  handling  by  unskilled  operators. 

But  when  the  shaft  gets  to  a  depth  of  2,500  feet  or  more, 
the  conditions  are  generally  such  as  to  warrant  a  special  hoist. 
As  it  is  improbable  that  any  two  hoisting  problems  will  be  ex- 
actly alike,  the  selection  of  the  proper  equipment  calls  for 
special  engineering  knowledge. 

Complete  Understanding  Necessary. — Most  mining  com- 
panies, and  by  this  term  is  meant  those  producing  copper,  iron 
ore,  lead,  zinc  or  any  other  metal  (not  coal),  have  on  their 
staff  a  mechanical  or  consulting  engineer,  who  will  assist  the 
buyer  in  solving  these  problems.  A  complete  understanding 
of  the  various  details  involved  should  be  reached  before  a 
hoist  installation  is  selected.  All  the  data  should,  of  course, 
be  cleared  through  the  purchasing  department. 

Assuming  that  the  buyer  has  been  requested  to  start  nego- 
tiations for  a  hoisting  engine  for  a  permanent  installation,  the 

^  Much  of  the  technical  data  in  this  section  of  the  chapter  was  obtained 
from  bulletins  published  by  the  Nordberg  Manufacturing  Company  and  Allis- 
Chalmers  Manufacturing  Company,  both  mentioned  in  the  next  paragraph. 


PURCHASE  OF  MINE  EQUIPMENT 


\11 


first  step  is  to  submit  to  the  manufacturers  a  preliminary  data 
sheet  something  like  the  following: 


6.  Load  * 


8.  Shaft, 


PROPOSED   HOISTING   PLANT 
\.  Customer     

2.  Location     

3.  Type   of  hoist,   steam   or    electrical    

4.  Geared   or   first  motion    

5.  Single    or    double    drum     

Weight  of  skip 

"         "    cage     

"    car    

"    ore     

"    rope     

7.  Average    speed    desired     

/-Vertical    or    inclined    

Degree   of   inclination    from    horizontal    

Single  or  double   compartment    

Size    of    compartments     

Present    depth     

.  Ultimate    depth     

9.  Size  and  kind  of  rope  to  be  used   dia strands wires 

10.  Cages — In    balance    or    independent    

11.  If   in   balance,   will   hoist  ever   be  called   upon   to  operate   unbalanced?     If 

so,  for  how  long  at   a  time  or  for  how  many  trips  consecutively  will 
it  be  necessary  to  operate   unbalanced  ?    

12.  Type    of    clutch    desired     

13.  Type  of   brake   desired    

14.  Corliss    or    slide    valve     

15.  Steam   pressure   available   at  engine    

'Alternating  or  direct   

Voltage    

Phase    

Cycle    

Time  in  operation  

Time  required  to  load  or  unload   .... 
^Time  of  stop  between  hoisting  periods 

17.  How  far  will  hoist  be  located  from  center  of  shaft?   

18.  How  high  will  head  sheaves  be  above  center  line  of  hoist  drums?   

19.  Will  hoist  be  located  towards  side  or  end  of  shaft?   

20.  Remarks    


16.  Electric  current  available  at  motor. 


When  one  goes  to  a  physician  for  consultation,  there  is 
nothing  to  be  gained  by  keeping  back  information  bearing  on 
the  case,  for  the  professional  rnan  usually  needs  it  to  make  a 
correct  diagnosis.  So  in  giving  the  preliminary  data  regard- 
ing the  new  hoisting  plant,  all  the  information  available 
should  be  freely  given  the  prospective  builder.  The  reasons 
for  most  of  the  questions  given  above  are  self-evident.  A  few 
words  in  connection  with  some  of  the  others  may  not  be 
amiss. 


178     PURCHASING  PRINCIPLES  AND  PRACTICES 

Question  4. — Geared,  or  First  Motion. — Many  companies 
prefer  a  geared  hoist,  especially  for  the  hoisting  and  lowering 
of  men  and  supplies.  In  Michigan  the  law  requires  that  the 
maximum  speed  when  hoisting  men  shall  not  exceed  1,200  feet 
per  minute.  When  hoisting  rock  or  ore,  the  speed  may  go  to 
2,500  or  3,000  feet  per  minute.  While  high  speed  may  be 
obtained  with  a  geared  hoist,  if  speed  is  essential  the  first- 
motion  machine  should  be  specified.  The  question  of  gearing 
will  naturally  come  up  if  the  hoist  is  to  be  run  by  a  motor. 

Question  5. — Single  or  Double  Drum. — It  may  be  desired 
to  use  one  engine  to  hoist  from  two  shafts,  in  which  event  two 
drums  will  be  required,  as  one  must  be  thrown  out  of  gear 
while  the  other  is  serving  its  shaft.  The  second  drum  may  be 
used  instead  for  winding  the  rope  attached  to  the  balance 
weight,  car  or  cage.  This  device  was  adopted  a  few  years 
ago,  and  is  referred  to  under  Question  10. 

Drums  may  be  cylindrical  or  conical.  The  former  is  gen- 
erally used,  but  at  great  depths  the  weight  of  rope  often 
equals  or  exceeds  the  weight  of  ore,  and  in  order  to  decrease 
the  starting  movement  and  cylinder  sizes,  where  hoisting 
can  be  done  in  balance,  a  special  type  of  drum  with  conical 
ends  and  cylindrical  center  portion  is  often  specified.  This 
type  of  drum  has  proven  very  successful,  especially  in  the 
mining  section  of  northern  Michigan.  One  engine  builder 
alone  has  In  service  about  40  hoists  fitted  with  this  type  of 
drum  for  depths  of  3,000  to  7,000  feet. 

Question  9. — Size  and  Kind  of  Rope  to  Be  Used. — This  is 
one  of  the  most  Important  questions  to  be  decided  In  connec- 
tion with  the  hoisting  engine.  For  instance,  the  following  dif- 
ferences will  be  found  in  standard  1^-inch  diameter  6  x  19 
ropes,  I.  e.,  ropes  made  of  six  strands  and  a  hemp  centre,  nine- 
teen wires  to  the  strand,  although  the  weight  of  the  rope  per 
foot  is  the  same  in  each  instance,  namely,  2.45  lbs.: 


Extra 

Iron 

Cast 

Strong 

Plough 

Steel 

Cast 
Steel 

Steel 

List  Price 

40c. 

46c. 

56c. 

65c. 

Approximate  strength  in  tons  of  2000 

lbs 

22.8 

47 

S3 

58 

Proper  working  load  in  tons  of  2000 

lbs 

4.56 

9.4 

10.6 

12 

PURCHASE  OF  MINE  EQUIPMENT         179 

If  it  is  desirable  to  have  a  rope  of  greater  pliability  than  those  indicated, 
it  can  be  obtained  by  increasing  the  number  of  wires;  making  the  rope  six 
strands  of  thirty-seven  wires  each,  or  eight  strands  of  nineteen  wires  each, 
wound  around  a  hemp  center.  In  these  extra  pliable  ropes  the  wires  do  not 
have  as  large  an  area  as  in  ropes  of  standard  6  x  19  construction,  nor  will 
they  stand  abrasion  as  well.  The  best  engine  in  the  world  will  be  valueless 
if  the  proper  rope  is  not  used,  even  if  the  factor  of  safety  only  is  considered. 

Question  10. — Cages,  in  balance  or  independent. — As 
already  noted,  the  hoist  may  have  two  drums,  one  for  the 
cage  or  skip,  and  the  other  for  a  balance  weight,  car  or  cage. 
Or  one  drum  only  may  be  used,  and  the  two  cages;  or  the  cage 
and  the  balance,  may  be  wound  on  this  drum.  If  it  should 
ever  be  necessary  to  operate  one  cage  at  a  time,  or  unbalanced, 
provision  must  be  made  for  power  sufficient  to  hoist  the  maxi- 
mum load. 

Question  11. — Type  of  Clutch  Desired. — Clutches  arc  of 
various  types  to  meet  different  conditions.  For  instance,  there 
is  the  multiple  tooth  clutch,  with  the  driving  and  driven  mem- 
bers made  of  cast  steel,  each  having  cut  teeth  which  are  accu- 
rately machined  to  insure  equal  distribution  of  pressure  in  the 
teeth.  The  driven  member  Is  fastened  to  the  drum  spider. 
The  driving  member  slides  on  the  shaft,  and  revolves  with  it. 
Sometimes  the  hub  is  machined  hexagonally  and  slides  on  a 
hexagonal  portion  of  the  shaft,  which  is  enlarged  a  trifle  over 
the  shaft  diameter,  while  in  other  cases  the  hub  is  bored  out 
and  feather  keys  are  used  for  driving. 

Then  there  is  the  Improved  Lane  friction  clutch,  which  con- 
sists of  a  spider  keyed  to  the  drum  shaft,  a  fixed  and  a  mova- 
ble arm,  a  friction  hand,  and  a  sliding  sleeve.  One  may  spe- 
cify the  Brown  heavy  duty  multiple  arm  friction  clutch,  which 
consists  of  a  driver  keyed  to  the  drum  shaft,  two  ribbed  rings 
to  which  friction  blocks  are  attached,  toggle  levers  for  the 
rings,  a  steel  clutch  ring  fastened  to  the  drum  and  a  sliding 
sleeve.  This  is  a  very  powerful  clutch,  and  operates  equally 
well  for  either  direction  of  rotation.  Finally,  there  is  the 
axial  plate  clutch,  which  consists  essentially  of  two  heavy 
rings  lined  with  basswood,  which  grip  a  ring  bolted  to  the 
brake  ring.  The  two  clutching  rings  are  supported  on  heavy 
driving  spiders  by  pins  which  allow  free  movement  of  the 
rings  in  an  axial  direction.  The  clutching  rings  are  moved  by 
toggles  carried  by  the  driving  spider,  and  operated  from  a 
sliding  collar  and  yoke  on  the  shaft.  The  construction  is 
such  that  the  toggles,  when  set,  pass  over  center  and  lock  the 


180     PURCHASING  PRINCIPLES  AND  PRACTICES 

clutch  in  position,  so  that  there  is  no  strain  in  an  axial  direc- 
tion, tending  to  disengage  the  clutch.  This  is  a  very  efficient 
type.  The  plate  clutch  has  one  advantage  over  the  band  type, 
in  that  the  rope  can  lead  oft  the  drum  in  either  direction, 
while  in  the  latter  type  it  must  lead  off  in  one  direction  only. 

Question  13. — Type  of  Brake  Desired. — Brakes  are  either 
the  band  or  post  type.  Very  few,  if  any,  manufacturers  rec- 
ommend the  band  type,  because  they  cannot  be  applied  or 
relieved  uniformly;  neither  are  they  as  safe  as  the  post  or 
under  brakes,  because  the  stresses  are  high,  and  the  entire 
maximum  stress  must  come  upon  one  pin.  For  smaller  hoists, 
either  steam  or  electric,  the  post  type  brakes  are  hand  oper- 
ated, with  a  hand  wheel  and  screw,  or  with  a  lever  and  quad- 
rant, as  desired.  For  larger  hoists,  the  brakes  are  of  the 
gravity  type,  operated  by  thrust  cylinder,  using  either  steam, 
air  or  oil  under  pressure,  the  brake  being  applied  by  a  fixed 
weight  and  relieved  by  the  thrust  cylinder. 

The  prospective  purchaser  will  want  to  go  into  the  details 
of  these  types  of  brakes  very  thoroughly,  as  they  are  a  very 
important  part  of  the  machine. 

Questions  17-18-19. — These  questions  have  special  import- 
ance in  connection  with  the  location  of  the  head  sheaves, 
especially  in  shafts  having  two  or  more  compartments. 

Within  the  past  few  years  a  device  for  keeping  hoisting 
engines  under  control  has  been  placed  on  the  market.  This 
apparatus  is  guaranteed  to  control  all  types  and  sizes  of  steam, 
air  and  electric  mine  hoists,  preventing  overspeeding  and 
overwinding  in  hoisting  and  lowering,  yet  it  does  not  subject 
the  hoist  to  a  dangerous  shock  or  jar. 

The  mechanism  is  set  to  keep  the  engine  from  hoisting  over 
a  certain  speed,  begins  to  slow  it  down  when  the  skip  or  cage 
is  within  400  feet,  or  whatever  other  distance  may  be  desired, 
from  the  dump,  and  automatically  stops  the  engine  if  an  over- 
hoist  is  made.  There  is  no  doubt  that  all  new  mine  hoists, 
especially  long-hauling  ones,  will  be  equipped  with  this  kind  of 
device  in  the  future. 

Lathes. — No  machine  shop  is  complete  without  one  or  more 
lathes.  In  fact  the  lathe  is  sometimes  called  the  universal 
tool,  because  it  is  the  oldest,  the  first  developed,  and  the  most 
important  of  all  machine  tools.  The  screw  cutting  engine 
lathe  is  the  machine  from  which  all  other  machine  tools  were 
developed. 


PURCHASE  OF  MINE  EQUIPMENT         181 

In  "How  to  Run  a  Lathe,"  a  booklet  published  by  the 
South  Bend  Lathe  Works,  South  Bend,  Ind.,  we  find  these 
statements:  "It  was  the  lathe  that  made  possible  the  building 
of  the  steamboat,  the  locomotive,  the  electric  motor,  the  auto- 
mobile and  all  kinds  of  machinery  used  in  industry.  Without 
the  lathe,  our  great  industrial  progress  of  the  last  century 
would  be  impossible." 

The  buyer  of  a  lathe,  or  any  machine  tool  for  that  matter, 
will  not  find  it  necessary  to  go  very  far  to  obtain  his  machine, 
for  there  are  many  manufacturers  of  all  kinds  in  the  United 
States.  Further,  it  might  be  kept  in  mind  that  this  country 
leads  the  world  in  the  production  and  quality  of  these  ma- 
chines, and  the  names  of  prominent  American-made  tools  are 
almost  as  well  known  in  the  principal  industrial  sections  of 
Europe  as  they  are  in  the  United  States. 

Repair  Work  of  Chief  Importance. — Mining  companies 
as  a  rule  have  plenty  of  space  on  their  properties,  so  consid- 
eration of  the  location  of  a  lathe  in  planning  the  layout  of 
the  machine  shop  is  one  feature  that  does  not  concern  them 
very  seriously.  Neither  are  they  as  much  interested  in  a 
machine  that  will  produce  a  certain  amount  of  work,  as  they 
are  in  obtaining  the  proper  outfit  for  the  repair  work  which 
comes  to  the  shop  daily.  The  smaller  type  of  lathe,  say 
that  having  about  a  16-inch  swing,  will  take  care  of  the 
repair  work  on  the  rock  drills.  When  it  comes  to  repairing 
one  of  the  hoisting  engines,  turret  lathes  or  gun  lathes  are 
necessary. 

"Universal"  would  seem  to  be  an  appropriate  name  for  a 
lathe,  because  so  many  kinds  of  work  may  be  done  on  this 
machine.  If  space,  money,  or  quickness  of  delivery  of  a  new 
machine  are  factors,  the  buyer  will  find  it  to  his  advantage  to 
concentrate  his  efforts  on  securing  some  type  of  lathe.  They 
take  up  no  more  room  than  other  machine  tools  and  cost  no 
more.  Furthermore  there  are  so  many  manufacturers  of  this 
type  of  machine  that  a  reasonable  delivery  could  be  obtained 
from  some  one  of  them.  While  the  drill  press  limits  the 
work  to  drilling,  the  boring  mill  to  boring,  and  the  planer  to 
planing  or  shaping,  all  these,  to  a  limited  degree,  may  be  done 
on  a  lathe,  in  addition  to  many  other  kinds  of  work,  such  as 
turning,  threading,  knurling,  milling,  etc.,  for  which  the 
machine  is  intended. 

The  buyer  will  find  that  manufacturers  of  lathes,  as  well  as 


182     PURCHASING  PRINCIPLES  AND  PRACTICES 

the  jobbers  of  such  machines,  will  be  more  than  anxious  to 
meet  the  purchaser  half  way  and  help  him  to  decide  just  what 
machine  is  best  suited  to  his  work. 

Pointers  for  the  Buyer. — While  the  successful  buyer  for  a 
mining  company  must  have  at  least  a  general  knowledge  of 
rock  drills,  hoisting  engines  and  machine  tools,  it  is  rare 
indeed  that  the  buyer  is  an  expert  in  any  particular  line.  He 
may  know  all  that  is  necessary  to  buy  to  the  best  advantage  the 
general  run  of  supplies,  such  as  packing,  hose,  lumber,  belt- 
ing, iron  and  steel  products,  etc.,  and  as  a  rule  the  buyer  for 
the  average  mining  company  is  given  free  rein,  but  when 
it  comes  to  obtaining  the  classes  of  machinery  mentioned  in 
this  article,  he  will  find  that  these  two  rules  should  be  followed 
to  obtain  the  best  results: 

1.  Have  a  complete  and  definite  understanding  with  your 
underground  superintendent,  the  superintendent  of  motive 
power,  or  foreman  of  machine  shop,  regarding  the  rock  drill, 
hoisting  engine  or  lathe  you  will  require : 

2.  Be  perfectly  frank  in  your  negotiations  with  the  pros- 
pective seller,  in  order  that  he  may  feel  free  to  acquaint  you 
with  all  the  peculiarities  of  his  product,  and  make  sure  his 
engineers  and  yours  are  in  accord  regarding  the  different 
characteristics  of  the  machine  in  question. 

In  this  summing  up,  no  mention  is  made  of  price.  It  is  un- 
derstood, of  course,  that  the  cost  will  be  a  factor,  but  that  it 
is  secondary  to  the  selection  of  the  article  which  is  best  suited 
to  the  job  in  hand. 


Chapter  XXII 

COAL  FOR  STEAM  OR  HEATING^ 

Object  of  the  Coal  Buyer. — The  sole  object  of  the  coal 
buyer  is  to  secure  the  greatest  number  of  heat  units,  at  the 
lowest  total  cost,  in  the  form  best  adapted  to  a  certain 
power  plant.  The  first  step  is,  therefore,  to  determine  which 
coal  contains  the  greatest  number  of  heat  units  per  ton  or  per 
pound.  By  referring  to  Bulletin  No.  123  of  the  Bureau  of 
Mines,  pages  17  to  131,  or  better  yet  to  the  "Coal  Catalog," 
you  will  find  a  statement  of  the  number  of  heat  units  in  coal 
from  every  district.  For  your  preliminary  investigation,  all 
other  factors  may  be  disregarded. 

After  you  have  selected  those  with  the  greatest  heat  value 
and  set  them  down  with  their  laboratory  numbers,  location, 
and  B.  T.  U.*  in  parallel  columns,  the  delivered  price  per  ton 
should  be  added  to  the  next  column,  and  the  delivered  price 
per  thousand  B.  T.  U.  set  down  in  the  next  column.  Any 
reliable  dealer  can  quote  the  approximate  delivered  cost,  and 
the  cost  per  M,  B.  T.  U.,  can  easily  be  figured.  The  next 
step  is  to  eliminate  the  least  desirable  coals. 

As  you  eliminate  each  sample  from  your  calculations,  the 
reason  for  this  elimination  may  be  set  down  in  the  last  column 
to  the  right.  This  will  afford  a  permanent  record  of  the 
reasons  for  each  elimination. 

Hauling  Costs  a  Factor. — As  the  freight  charges  are  a 
very  large  element  in  the  total  cost  of  coal,  many  of  the  most 
distant  coals  must  first  be  eliminated.  You  can  hardly  afford 
to  use  either  Pennsylvania  or  West  Virginia  coals  for  making 
steam  in  Illinois. 

If  ashes  must  all  be  moved  by  hand  and  hauled  away  by 
truck,  you  will  next  eliminate  those  samples  which  are  unduly 
high  in  ash.  If,  on  the  other  hand,  the  ashes  are  all  handled 
automatically,  and  disposed  of  without  cost,  you  may  better 

*ThIs  chapter  and  the  two  following  chapters  were  written  with  the  coopera- 
tion of  Charles  A.  Lind,  Fuel  Agent  of  the  Commonwealth  Edison  Co.,  of 
Chicago. 

"B.  T.  U.,  the  abbreviation  for  British  Thermal  Unit,  is  the  quantity  of  heat 
required  to  raise  one  pound  of  water  one  degree  Fahrenheit. 

183 


184    PURCHASING  PRINCIPLES  AND  PRACTICES 

afford  to  buy  coal  containing  20  percent,  ash  and  10,000 
B.  T.  U.  costing  $3  per  ton  delivered,  than  coal  containing 
10  percent,  ash  and  10,000  B.  T.  U.  at  $3.50,  because  the 
B.  T.  U.  is  the  number  of  B.  T.  U.  in  a  pound  of  coal,  and 
not  the  number  of  B.  T.  U.  in  a  cubic  foot  or  a  cubic  yard. 
If  the  heat  units  are  in  usable  form,  the  extra  volume  of  ash 
simply  acts  as  a  harmless  filler. 

Storage  Points. — If  you  are  so  situated  that  it  is  necessary 
to  store  coal  for  any  length  of  time,  you  will  next  eliminate 
those  samples  which  are  high  in  moisture  and  high  In  sulphur. 
Coal  containing  a  high  percentage  of  moisture  disintegrates 
rapidly  and  tends  to  spontaneous  combustion,  and  a  high  sul- 
phur coal  also  aids  spontaneous  combustion.  If,  however,  you 
have  a  modern  underwater  storage  system,  this  objection  will 
not  hold. 

High  and  Low  Volatile  Coal. — If  your  combustion  cham- 
bers are  constricted,  or  If  you  must  avoid  excessive  smoke,  it 
is  well  next  to  eliminate  those  coals  which  run  high  In  volatile, 
because  It  is  the  volatile  matter  which  Is  discharged  from  your 
stack  in  the  form  of  smoke.  If  your  plant  Is  not  equipped  to 
burn  all  the  volatile  matter  in  the  coal  you  select,  all  that  is 
not  burned  is  a  loss.  A  smoking  stack  always  means  imper- 
fect combustion,  due  to  the  wrong  kind  of  fuel  for  that  plant, 
or  to  wrong  handling  In  the  plant.  The  proper  combustion  of 
high  volatile  coals  requires  large  combustion  chambers  and 
careful  handling. 

Adequate  Transportation  a  Vital  Factor, — The  impor- 
tance of  adequate  transportation  facilities  can  hardly  be  over- 
emphasized. If  the  mine  upon  which  you  depend  is  at  one  end 
of  a  short,  direct  route,  and  you  are  at  the  other  end,  you 
profit  in  many  ways.  The  amount  of  coal  in  transit  and, 
therefore,  the  amount  of  money  so  tied  up,  is  greatly  lessened. 
Stop  orders  are  effective  more  promptly  and  you  begin  to 
receive  coal  quicker  after  the  resumption  of  shipments.  This 
also  greatly  reduces  the  liability  of  accumulating  demurrage 
charges. 

Where  shipments  originate  upon  intrastate  railroads,  pecu- 
liar complications  sometimes  ensue.  Several  years  ago  a 
short  Intrastate  railroad  In  Indiana  which  depended  almost 
entirely  upon  coal  for  its  revenue  went  into  .  receivership.  It 
happened  that  the  judge  who  acted  as  receiver  knew  little 
about  railroad  management,  but  did  not  want  anyone  to  tell 


COAL  FOR  STEAM  OR  HEATING  185 

him  how  he  should  run  his  business.  His  first  idea  was  to  re- 
duce the  rates  in  order  to  build  up  the  volume  of  business,  and 
under  the  regulations  then  in  effect  he  had  full  authority  to 
change  the  rates  whenever  he  chose.  It  was  rather  a  dull 
business  year  when  he  reduced  the  rates,  and  coal  was  not 
much  in  demand.  The  rate  cut  was  not  made  until  after  most 
coal  contracts  were  signed,  and  the  net  result  was  a  cut  in 
revenue  per  ton  mile  with  no  marked  increase  in  the  volume 
of  business. 

Juggling  Freight  Rates. — After  watching  the  consistent 
shrinkage  in  net  receipts  for  a  few  weeks,  the  receiver  in- 
creased the  rates  again.  If  he  had  only  put  them  back  to  the 
old  basis,  not  much  harm  would  have  resulted.  In  an  attempt 
to  recover  all  the  ground  he  had  lost  because  of  the  former 
reduction,  however,  he  boosted  the  rate  35  cents  higher  than 
it  had  been  before. 

The  net  result  was  an  almost  complete  shutdown  of  all  the 
mines  on  this  road,  as  the  coal  buyers  could  not  pay  the  in- 
crease in  freight  rate,  and  the  operators  could  not  absorb  the 
35  cents  per  ton,  or  any  large  part  of  it.  Coal  was  then  sell- 
ing at  about  one  dollar  a  ton  at  the  pit  mouth.  This  peculiar 
situation  indirectly  led  to  the  discovery  of  some  remarkable 
coal  thefts  which  are  referred  to  further  on. 

The  Final  Choice. — You  have  now  perhaps  narrowed  your 
choice  of  coal  samples  to  three  or  four,  and  your  final  decision 
will  depend  very  largely  upon  the  net  result  of  your  test  runs. 
Often  coal  from  two  mines  in  the  same  district  will  act 
differently  under  actual  firing  tests. 

In  many  modern  plants  it  is  possible  to  determine  with  ac- 
curacy the  total  cost  of  producing  one  pound  of  steam  with 
various  kinds  of  coal,  and  under  varying  conditions.  A  care- 
ful test  of  a  large  number  of  samples,  even  then,  is  often 
unduly  expensive.  If  you  know  that  any  particular  coal  con- 
tains more  heat  units  than  the  one  you  have  been  using,  and 
if  your  firing  tests  show  that  the  furnaces  will  use  this  coal  as 
efiiciently  as  the  other  coal;  if  your  ash  handling  cost  is  not 
increased,  and  if  the  delivered  cost  for  1,000  B.  T.  U.  is  less, 
you  are  usually  safe  in  contracting  for  that  particular  kind  of 
coal.  Unfortunately,  there  are  so  many  variables  in  the  prob- 
lem that  it  is  extremely  difficult  to  prove  a  saving  of  any 
certain  number  of  dollars  in  the  purchase  of  coal  for  most 
industrial  power  plants. 


186     PURCHASING  PRINCIPLES  AND  PRACTICES 

Carelessness,  Theft. — When  coal  is  delivered  to  your  plant 
from  a  distant  team  track,  dishonest  practices  are  apt  to  crop 
up.  If  the  coal  is  handled  through  a  coal  yard,  and  all  trucks 
are  weighed  at  both  ends  of  the  route,  about  the  only  way  the 
buyer  can  be  defrauded  is  through  collusion  between  truck 
driver  and  weighmaster.  If  there  is  collusion,  only  part  of 
the  load  may  be  dumped,  and  the  rest  driven  off  and  sold. 
This,  however,  would  hardly  pay  for  the  trouble  and  the  risk 
involved.  But  the  weighmaster  may  sign  for  loads  of  coal 
which  leave  the  coal  yard,  yet  never  reach  your  plant.  An 
automatic  timer  and  weight  registering  device  on  your  scale 
will  prevent  this  theft,  and  will  also  prevent  the  falsifications 
of  the  weight  of  each  load. 

When  there  is  no  such  protecting  device  it  is  a  fairly  simple 
matter  to  "fudge"  the  weight  of  each  load,  and  the  weigh- 
master may  sign  for  various  loads  which  he  does  not  receive 
There  is  still  the  possibility  that  coal  may  be  properly  weighed, 
and  then  dumped  in  the  next  block,  and  the  empty  coal  truck 
properly  reweighed.  The  only  safe  check  is  occasionally  to 
have  the  loads  turned  back  for  reweighing,  and  to  install  an 
independent  observer  to  make  a  check  on  the  operation  of 
your  scales.  In  one  case  in  Indiana  this  double  check  proved 
a  shortage  of  more  than  one  hundred  tons  of  coal  in  three 
days. 

In  order  to  carry  on  thefts  of  this  kind,  the  cooperation  of 
at  least  one  teamster  is  necessary,  and  the  teamster  soon  be- 
comes careless  and  the  theft  is  detected.  Where  the  power 
plant  is  located  on  a  switch  track  the  installation  of  a  railroad 
scale  makes  it  possible  to  check  coal  deliveries  easily,  and  the 
total  labor  of  weighing  a  given  lot  of  coal  is  so  much  less  that 
a  higher  type  of  employee  may  profitably  be  assigned  to  this 
duty. 

How  a  Shortage  Was  Discovered. — The  discovery  of  the 
particular  shortage  of  100  tons  of  coal  in  three  days  was,  in 
part  at  least,  due  to  the  peculiar  freight  situation  already  re- 
ferred to. 

The  2>S  cents  extra  freight  rate  was  still  in  force  when  new 
coal  contracts  were  being  negotiated.  The  factory  owner 
knew  the  various  price  factors  in  the  bid  submitted,  and  knew 
that  the  gross  margin  of  profit  was  25  cents.  There  was  every 
probability  that  the  extra  burden  of  35  cents  would  be  with- 


COAL  FOR  STEAM  OR  HEATING  187 

drawn,  but  there  was  no  definite  assurance  that  it  would  not 
remain  in  effect  for  six  months. 

The  contractor  was,  however,  willing  to  close  the  new  con- 
tract on  the  same  basis  as  the  contract  of  the  year  before.  In 
other  words,  he  was  willing  to  risk  a  loss  of  35  cents  per  ton 
when  his  legitimate  gross  profit  was  only  25  cents  per  ton. 
He  was  not  only  willing,  but  anxious  to  close  the  contract  on 
that  basis.  Because  of  this  fact  the  factory  owner  became 
suspicious,  and  began  the  investigations  which  disclosed  the 
loss  referred  to. 

As  soon  as  his  suspicions  were  aroused  he  had,  however, 
ordered  in  a  huge  reserve  stock,  with  the  result  that  he  held 
coal  worth  several  thousand  dollars,  the  bills  for  which  were 
still  unpaid,  when  he  preferred  charges  against  the  contractor. 
It  is  much  easier  to  settle  a  claim  when  the  other  party  is  in 
the  wrong,  and  you  owe  him  for  the  goods  delivered. 

Ash  Fusing  Point. — For  certain  types  of  high  pressure 
boilers,  the  fusing  point  of  the  ash  is  of  prime  importance.  If 
you  are  operating  a  travelling  grate  you  will  need  coal  with  a 
high  ash  fusing  point,  as  the  fusing  of  the  ash  will  tend  to 
clog  the  efiicient  operation  of  the  grate.  If,  however,  you 
are  using  underfeed  stokers,  the  efficient  operation  depends 
upon  a  low  fusing  ash,  because  all  ash  must  be  pulled  out 
of  the  front  of  the  furnace. 

If  the  ash  fuses  into  a  great  clinker,  it  is  easily  removed 
without  letting  the  steam  down.  The  ash  which  does  not 
fuse  into  a  clinker,  but  remains  in  small  bits,  or  runs  like 
molasses,  not  only  places  an  undue  burden  on  the  firemen,  but 
the  length  of  time  required  to  clean  the  furnaces  adds  to  the 
smoke,  and  causes  the  loss  of  a  great  amount  of  heat  because 
of  the  open  furnace  doors. 

Long  Ton  and  Short  Ton. — Most  people  mean  2,000 
pounds  when  they  speak  of  a  ton.  Most  Government  offices 
and  some  private  business  firms  use  the  long  ton  (2,240  lbs.), 
however.  Many  firms  have  lost  a  great  deal  of  money  be- 
cause they  agreed  to  sell  at  so  much  for  2,240  pounds  when 
they  meant  to  bid  that  figure  for  2,000  pounds. 

Dry  and  "as  Received"  Samples. — As  the  term  implies,  the 
analysis  of  a  sample  of  coal  "as  received"  means  as  it  was 
taken  from  the  mine,  car,  or  waggon.  The  dry  basis  is  the 
analysis  after  all  the  moisture  has  been  removed  by  placing 
the  sample  in  a  drying  oven.     The  percent,  of  ash  in  a  dry 


188     PURCHASING  PRINCIPLES  AND  PRACTICES 

sample  is,  of  course,  larger  than  in  the  same  sample  "as  re- 
ceived" and  there  are  more  B.  T.  U.  in  a  pound  of  dry  coal, 
than  in  a  pound  of  the  same  coal  "as  received."  The  formula 
for  transposing  dry  B.  T.  U.  to  the  "as  received"  basis  is  as 
follows : 

TO  TRANSPOSE  B.  T.  U.  ON  THE  DRY  BASIS  TO  B.  T.  U.  AS 
RECEIVED: 

Multiply  B.   T.   U.   by   100   less  the  moisture  content,   i.e. 
12214  X   (100  — 9.94)  -- 11000     B.     T.     U.     as     received. 

TO  TRANSPOSE  B.  T.  U.  AS  RECEIVED  TO  DRY  B.  T.  U.: 

Divide    the    B.    T.    U.    by    100    less    the    moisture,    i.e. 
11000-^(100 — 9.94)  =  12214     B.      T.      U.      dry      basis. 

An  excellent  method  of  sample  taking  and  analysis  is  given 
in  Bulletin  No.  123,  U.  S.  Bureau  of  Mines,  from  which  the 
quoted  matter  following  is  reprinted.  Technical  Paper  No. 
8,  and  Bulletin  No.  22,  issued  by  the  Bureau  of  Mines,  may 
also  be  consulted  to  advantage. 

SAMPLE  TAKING  AND  ANALYSIS 

The  method  of  collecting  mine  samples  by  the  Bureau  of  Mines  involves 
selecting  a  representative  face  of  the  bed  to  be  sampled;  cleaning  the  face; 
making  a  cut  across  it  from  roof  to  floor,  and  rejecting  or  including  impurities 
in  this  cut  according  to  a  definite  plan,  as  they  are  included  or  excluded  in 
mining  operations;  reducing  this  gross  sample,  by  crushing  and  quartering,  to 
about  three  pounds;  and  immediately  sealing  the  3-pound  sample  in  air-tight 
container  for  shipment  to  the  laboratory. 

Collection  of  car  samples. — The  carload  lots  of  coal  shipped  to  Pittsburgh  for 
test  were  sampled  by  taking  definite  quantities  of  coal  at  regular  intervals  from 
a  car  as  it  was  unloaded,  and  by  reducing  to  convenient  size  (about  SO  pounds) 
the  gross  sample  thus  obtained.  The  method  of  collecting  and  reducing  car 
samples  is  given  in  detail  in  Bureau  of  Mines  Bulletin  No.  116. 

Preparation  of  laboratory  samples. — Immediately  after  the  sealed  3-pound  can 
in  which  the  sample  is  received  at  the  laboratory  has  been  opened,  the  contents 
are  transferred  to  a  weighed  sheet-metal  pan,  spread  out  to  a  depth  of  1  inch, 
and  at  once  weighed.  The  pan  containing  the  sample  is  placed  in  a  large  dry- 
ing oven  in  which  a  temperature  of  30  to  3  5  degrees  C.  is  maintained. 

Through  this  oven  a  current  of  warm  air  is  made  to  flow  by  means  of  an 
ordinary  desk  fan  mounted  on  top  of  the  oven,  and  the  sample  is  dried  until 
the  loss  in  weight  between  two  successive  weighings,  made  6  to  12  hours  apart, 
does  not  exceed  0.5  percent.  The  total  loss  of  weight  is  reported  as  "air-drying 
loss." 

Determination  of  moisture. — The  residual  moisture  in  the  air-dried  sample 
is  determined  by  heating  1  gram  in  a  shallow  porcelain  capsule,  seven-eighths 
of  an  inch  deep  and  1^4  inches  in  diameter,  for  one  hour  at  105  degrees  C.  in  a 
constant  temperature  oven,  through  which  a  current  of  dry  preheated  air  is 
rapidly  passing.  The  air  is  dried  by  being  passed  through  concentrated  sul- 
phuric acid.  The  covered  capsule  is  cooled  in  a  desiccator  over  sulphuric  acid 
and  then  weighed.  The  loss  in  weight  is  called  "moisture  at  105  degrees"  in 
the  air-dried  coal. 


COAL  FOR  STEAM  OR  HEATING  189 

Ash  determination. — The  same  sample  is  used  for  determining  ash  as  was 
previously  used  for  determining  moisture.  A  porcelain  capsule  containing  the 
sample  is  placed  in  a  cool  muffle  and  the  temperature  gradually  raised  to  ap- 
proximately 750  degrees  C.  The  ignition  in  the  muffle  is  continued,  with  occa- 
sional stirring  of  the  ash,  until  all  particles  of  carbon  have  disappeared.  After 
the  capsule  containing  the  ash  has  been  cooled  in  a  desiccator  it  is  weighed,  and 
ignition  is  repeated  until  constant  weight  (O.OOOS  gram  or  less)  has  been 
attained. 

The  ash  content  as  determined  by  the  method  represents  the  ignited  mineral 
residue  or  "uncorrected  ash." 

Determination  of  volatile  matter. — A  1-gram  sample  of  the  fine  (60  mesh) 
coal  is  weighed  into  a  bright  well-burnished,  10-gram  (10  c.c.)  platinum  crucible 
(a)  with  a  close-fitting  capsule  cover  (b)  the  crucible  and  contents  are  heated 
to  a  temperature  of  950  degrees  C.  in  a  specially  designed  electric  furnace  of 
the  vertical  type.  After  having  been  heated  exactly  seven  minutes,  the  crucible 
is  removed  from  the  flame,  cooled,  and  weighed.  The  loss  in  weight  minus  the 
weight  of  moisture  determined  at  105  degrees  C.  times  100  equals  the  percentage 
of  volatile  matter. 

Determination  of  fixed  carbon. — The  fixed-carbon  content  of  the  sample  is 
determined  by  calculation — by  subtracting  the  sum  of  the  percentage  of  moisture, 
ash,  and  volatile  matter  from  100. 

Sulphur  determination. — Sulphur  is  determined  by  the  Eschka  method.  A 
1.3737  gram  part  of  the  air-dried  coal  is  mixed  with  6  grams  of  Eschka  mix- 
ture in  a  No.  1  porcelain  crucible  and  gradually  heated  in  a  muffle,  with  free 
access  of  air,  until  all  the  carbon  has  been  consumed.  The  sulphur  is  extracted 
with  hot  water,  completely  oxidized  to  sulphate  with  bromine  water,  and  pre- 
cipitated and  weighed  as  barium  sulphate. 

Determination  of  calorific  value. — The  heat  of  combustion  is  determined  with 
the  bomb  calorimeter.  One  gram  of  the  air-dried  coal  is  completely  burned 
in  compressed  oxygen  gas  and  the  total  heat  evolved  is  absorbed  in  a  weighed 
quantity  of  water  in  which  the  bomb  is  immersed.  The  rise  in  temperature  of 
the  water  is  measured  with  a  thermometer  that  is  graduated  in  hundredths  of 
1  degree  C,  and  can  be  read,  by  means  of  a  cathetometer,  to  0.002  degrees  C. 

Corrections  are  made  for  "radiation  losses,"  oxidation  of  nitrogen  to  aqueous 
nitric  acid,  and  oxidation  of  sulphur  dioxide  to  aqueous  sulphuric  acid.  The 
calorific  value  obtained  in  this  manner  is  the  total  heat  of  combustion  with 
water  vapour  condensed  to  liquid  water  at  the  temperature  of  the  calorimeter, 
that  is,  20  degrees  to  25  degrees  C. 

Interpretation  of  analytical  results. — The  coal  analyses  reported  in  this  bul- 
letin are  grouped  in  the  usual  manner,  as  follows: 

1.  The  proximate  analysis,  including  results  of  determinations  of  moisture, 
volatile  matter,  fixed  carbon,  and  ash. 

2.  The    ultimate    analysis,    including    results   of    determinations    of   carbon, 
hydrogen,  nitrogen,  oxygen,  sulphur  and  ash. 

3.  The  calorific  value,  heating  value,  or  heat  of  combustion. 

For  many  of  the  samples  the  analysis  is  given  for  three  conditions,  as  follows: 
(1)  As  received  at  the  laboratory,  (2)  computed  to  a  moisture-free  condition, 
and   (3)  computed  to  a  moisture-free  and  ash-free  condition. 

At  mines  where  two  or  more  samples  were  taken,  and  a  composite  sample 
obtained  b\'  mixing  equal  portions  of  the  separate  samples,  the  analysis  of  the 
composite  sample  is  given  for  the  three  conditions,  because  presumably  the  com- 
posite sample  represents  the  coal  in  the  mine  better  than  any  one  of  the  separate 
samples. 

The  analysis  of  the  sample  "as  received"  (condition  1)  represents  the  actual 
sample  as  received  at  the  laboratory  and,  as  for  a  mine  sample,  represents  the 


190     PURCHASING  PRINCIPLES  AND  PRACTICES 

coal  at  tlie  point  of  sampling  in  the  mine.  The  "moisture-free"  analysis  (con- 
dition 2)  represents  the  relative  composition  and  heating  value  of  the  dry  coal; 
this  form  of  analysis  is  convenient  for  comparing  similar  coals  of  variable 
moisture  content. 

The  "moisture-free  and  ash-free"  analysis  represents  approximately  the  rela- 
tive composition  and  calorific  value  of  the  dry  organic  or  combustile  matter. 
This  form  of  analysis  is  only  an  approximation,  because  the  ash  does  not  have 
the  same  weight  as  the  inorganic  or  incombustible  matter  in  the  coal.  However, 
the  error  does  not  exceed  1.5  per  cent  in  comparing  coals  that  do  not  vary  much 
in  the  character  and  amount  of  ash  and  sulphur. 

Domestic  Coal  Screenings. — Many  coals  are  suitable  for 
domestic  purposes,  although  the  screenings  from  those  coals 
are  practically  valueless.  For  instance,  Brazil  Block  from 
Brazil,  Indiana,  is  excellent  for  domestic  purposes,  but  the 
screenings  are  made  up  very  largely  of  Impurities. 

SMOKELESS    COALS 

Principal  Groups. — There  are  two  principal  groups  of 
smokeless  coals,  the  anthracite  and  the  Pocahontas  groups. 
Small  areas  of  anthracite  occur  in  the  West,  but  generally 
these  coals  have  been  converted  to  anthracite  by  the  heat  of 
some  mass  of  igneous  rock  that  was  thrust  into  the  other  rocks 
while  it  was  In  a  moulten  condition.  Many  such  masses  take 
the  form  of  thin  sheets  which  Were  forced  in  between  the  beds 
of  the  other  rocks,  and  consequently  for  some  distance  they 
may  lie  parallel  with  the  coal  beds.  If  a  coal  bed  is  cut  by  the 
Igneous  rock,  it  may  be  burned  to  ashes,  made  into  coke,  or 
converted  to  anthracite.  The  product  will  depend  on  the 
presence  of  air,  the  intensity  of  the  heat,  and  the  length  of 
time  the  coal  was  subjected  to  the  Influence  of  the  heated 
mass. 

Value  of  Anthracite. — Anthracite  is  an  almost  ideal  do- 
mestic fuel,  but  It  Is  not  well  adapted  to  steam  raising  unless 
an  absolutely  smokeless  coal  is  needed.  Many  people  believe 
that  anthracite  has  greater  heating  value  than  any  other  coal. 
That  is  not  true.  Largely  on  account  of  its  low  heating  power 
and  its  relatively  high  cost,  anthracite  is  not  an  economical 
fuel  for  steam  raising  or  for  use  in  general  manufacturing. 

Average  B.  T.  U.  per  pound  of  anthracite  coal 

Northern   coal    field,  13160 

East  Middle  coal  field  13420 

West  Middle  coal   field  12840 

Southern  coal   field  13220 


COAL  FOR  STEAM  OR  HEATING  191 

The  average  fuel  ratio  of  anthracite  (fixed  carbon  divided 
by  the  volatile  matter)  Is  not  more  than  50  or  60,  and  not 
less  than  10. 

Semi-Bituminous. — The  most  widely  known  seml-bitumln- 
ous  coal  is  the  "Pocahontas"  coal  mined  In  McDowell  county, 
West  Virginia.  The  name  "semi-bituminous"  Is  really  a  mis- 
nomer; the  term  should  be  super-bituminous,  because  this  coal 
Is  of  higher  grade  in  every  way  than  bituminous. 
The  fuel  ratio  (fixed  carbon  divided  by  volatile  matter) 
ranges  from  3  to  7.  Its  relatively  high  percentage  of  fixed 
carbon  makes  It  nearly  smokeless  when  it  Is  burned  properly, 
and  consequently  most  of  these  coals  go  into  the  market  as 
"smokeless  coals." 

Best  for  Steam  and  Heat. — The  best  coal  of  this  type  has 
a  heating  value  greater  than  that  of  any  other  rank  or  grade, 
and  is  consequently  best  adapted  to  raising  steam  and  to  gen- 
eral manufacturing  that  requires  a  high  degree  of  heat.  It  Is 
regarded  as  the  best  coal  for  steamship,  and  especially  for 
naval  use,  as  It  is  nearly  smokeless,  and  requires  less  bunker 
space  per  unit  of  heat  than  any  other  coal.  The  coal  is  gen- 
erally minutely  joined  and  Is,  therefore,  tender  and  friable. 
In  fact.  It  is  so  friable  that  In  mining,  a  large  percentage  of 
fine  coal  is  produced,  and  in  transportation,  many  of  the  lumps 
are  broken  to  pieces,  so  that  by  the  time  it  reaches  the  con- 
sumer, especially  If  It  has  been  trans-shipped.  It  Is  generally 
in  small  pieces. 

COAL  VALUES  TABULATED 
Average   Theoretical  B.   T.   U.  per  pound  of  semi-bituminous   coal 
Broad   Top,   Pa.  14820 

Clearfield,  Pa.  14950 

Cambria,  Pa.  14450 

Summerset,  Pa.  14200 

Cumberland,  Md.  14400 

Pocahontas,  15070 

New   River,  15220 

Coal  arranged  according  to  rank — hardness 

1.  Lignite 

2.  Bituminous 

3.  Semi-bituminous 

4.  Semi-anthracite 

5.  Anthracite 

Coal  arranged  according  to   grade — heat  value 

1.  Lignite 

2.  Bituminous 

3.  Semi-anthracite 

4.  Anthracite 

5.  Semi-bituminous 


192     PURCHASING  PRINCIPLES  AND  PRACTICES 

STEPS    IN    THE    PURCHASE    OF    COAL 

1.  List  samples  in  Bulletin  No.  123  that  have  highest  heat  value.  (See 
last  column.) 

2.  Set  down  opposite  each  the  delivered  price  per   1000  B.  T.  U. 

3.  Eliminate  those  which  are  unduly  expensive. 

4.  Eliminate  those  with  a  high  ash  content  if  your  ash  disposal  method  is 
expensive. 

5.  Eliminate  those  which  run  high  in  sulphur  and  high  in  moisture  if  you 
must   store   this  coal. 

6.  Eliminate  those  which  run  high  in  volatile  matter  if  you  must  keep  down 
the   smoke. 

7.  Eliminate  those  which  have  the  poorest  transportation  facilities. 

8.  Run  seven  day  tests  on  the  remaining  samples  in  order  to  determine 
which  coals  are  best  suited  to  your  special  plants,  watching  the  action  in 
the  furnace. 

9.  Select  the  coal  which  is  best  suited  to  your  conditions  and  which  will  give 
you  the  lowest  total  cost  per  thousand  horse  power. 

Other  pitfalls. — The  purchasing  agent  buying  coal  must  have  these  points 
in   mind: 

1.  Intrastate   Railroads. 

2.  Fusing  point  of  ash. 

3.  Dishonest  employees. 

4.  Long  ton. 

5.  Dry  B.  T.  U.  and  B.  T.  U.  as  received. 

6.  Analysis  of  samples  selected. 

7.  Brazil  Block. 

BIBLIOGRAPHY 

COAL  CATALOGUE,  KEYSTONE  PUBLISHING  CO.,   Philadelphia. 

FUEL  ECONOMY  IN  THE  OPERATION  OF  HAND-FIRED  POWER 
PLANTS,  University  of  Illinois  Bulletin   No.  31,  April   1,  1918. 

STOEK,  H.  H.,  "THE  STORAGE  OF  BITUMINOUS  COAL,"  University  of 
Illinois  Bulletin  No.  27,  March  4,   1918. 

ANNUAL  REPORTS  OF  DIRECTOR  OF  THE  BUREAU  OF 
STANDARDS,   Washington,   D.   C. 

ANALYSIS  OF  MINE  AND  CAR  SAMPLES  OF  COAL  COLLECTED  IN 
THE  FISCAL  YEARS  1913  to  1916,  Department  of  the  Interior,  Bureau  of 
Mines,  Washington,  D.  C,  Bulletin  No.  123. 

ANALYSIS  OF  COALS  PURCHASED  BY  THE  GOVERNMENT  DUR- 
ING THE  FISCAL  YEARS  1908  to  1915,  Department  of  the  Interior,  Bureau 
of  Mines,   Bulletin   No.    119. 

WEEKLY  REPORT  OF  BUREAU  OF  MINES. 

POPE,  GEORGE  S.,  "Analysis  and  Sampling  Government  Coal,"  Bureau 
of  Mines  Bulletin   No.   119,  41,   116,   11,   63. 

PORTER,  HORACE  CHAMBERLAIN,  "Some  Properties  of  the  Water  in 
Coal,"  Bureau  of  Mines  Technical  Paper  No.  113.  See  also  Technical  Paper 
No.   65   on   Oxidation   of   Coal. 

POWELL,  ALFRED  RICHARD,  "A  Study  of  the  Forms  in  Which  Sulphur 
Occurs  in  Coal,"  Engineering  Experiment  Station,  University  of  Illinois, 
Bulletin    No.    111. 

KREISINGER,  HENRY,  "Combustion  of  Coal  and  Design  of  Furnaces," 
Bureau   of   Mines  Bulletin    No.    135. 

KREISINGER,  HENRY,  "Saving  Coal  in  Boiler  Plants,"  Bureau  of  Mines 
Technical  Paper  No.  205. 


COAL  FOR  STEAM  OR  HEATING  193 

LE    CONTE,    JOSEPH,    "Lectures    on    Coal    at    The    Smithsonian    Institute." 

PARR,  SAMUEL  WILSON,  "Effects  of  Storage  upon  the  Properties  of  Coal." 

HAYS,  JOSEPH  WELLER,  "How  to  Get  More  Power  from  Coal— Why 
Twenty-five  Percent  of  the  Average  Pile  is  Wasted." 

THE  ECONOMICAL  USE  OF  COAL  IN  RAILWAY  LOCOMOTIVES," 
Prepared  under  the  direction  of  a  committee  consisting  of  J.  M.  Snodgrass, 
Major  E.  C.  Schmidt,  H.  H.  Stock,  S.  W.  Parr,  and  C.  S.  Sale.  The  University 
of  Illinois,   Engineering  Experiment  Station   Circular   No.  8. 

KATZ,  SIDNEY  H.,  "New  Views  of  the  Combustion  of  the  Volatile  Matter 
in   Coal,"  Bureau  of  Mines.     Technical   Paper   No.   183. 

ARBER,  EDWARD  ALEXANDER  NEWELL,  "The  Natural  History  of 
Coal." 

BLIZZARD,  JOHN,  "The  Economic  Use  of  Coal  for  Steam  Raising  and 
House    Heating,"    Canada,    Department    of    Mines,    Bulletin    No.    28. 

BURROWS,  JOHN  SHOBER,  "Results  of  Purchasing  Coal  under  Govern- 
ment Specifications,"  U.   S.   Geological   Survey,  Bulletin   No.   378. 

COSGROVE,  JAMES  FRANCIS,  "Coal,  Its  Economical  and  Smokeless  Com- 
bustion." 

FIELDNER,  ARNO  CARL,  "The  Fusibility  of  Coal  Ash,  and  the  Deter- 
mination of  the  Softening  Temperature." 


Chapter   XXIII 

COAL  ANALYSIS  A  GUIDE  ONLY 

Not  the  Last  Word. — In  reaching  a  conclusion  concerning 
the  best  coal  to  purchase  for  your  particular  plant,  the  chem- 
ist's analysis  of  the  various  coal  samples  should  be  regarded 
as  a  guide  only,  and  not  as  a  factor  of  prime  Importance. 
Coal  buyers  of  long  experience  regard  their  analytical  reports 
much  as  they  regard  commercial  reports,  I.  e.,  an  excellent 
guide  and  check  upon  their  own  conclusions,  but  by  no  means 
as  the  last  word  on  the  subject. 

These  statements  should  not  be  regarded  as  a  reflection 
upon  the  accuracy  of  the  chemical  reports,  although  labora- 
tory practice  is  not  as  thoroughly  standardized  as  one  might 
wish.  The  principal  difficulty  lies,  not  in  the  laboratory  work, 
but  In  the  difficulties  encountered  In  securing  fair  and  repre- 
sentative samples.     Most  of  the  sampling  Is  done  by  young 

Chart  I 

I     I     J     I     I    ,       I  ,-J     }     I 


I   NATUtlAl   COAL 


A5H   DRV   COAL  - 


DtUVERIESTO  IOWA  STATt  INSTITUllOllS  JULV  Iflft  TO  JUNE  HI 7 


men  with  rather  limited  experience   and  some    sampling    is 
deliberately  unfair. 

Coal  Samples. — Even  when  the  samples  are  taken  by  men 
of  experience  who  exercise  the  utmost  care,  wide  variations 
occur.  The  usual  practice  Is  to  divide  the  sample  Into  three 
equal  parts,  sealing  each  In  an  air-tight  container.     One  part 

194 


COAL  ANALYSIS  A  GUIDE  ONLY 


195 


is  analyzed  and  the  other  two  parts  are  kept,  in  order  to  make 
a  check  on  the  first  analysis  in  case  of  dispute.  Frequently 
the  reported  analysis  of  two  parts  of  the  same  sample  will 
show  a  variation  in  moisture  and  ash  of  1  to  4  percent.,  and 
in  B.  T.  U.  a  variation  of  as  much  as  10  percent. 

Charts  Show  Variations. — This  is  best  illustrated  by  the 
following  charts,  supplied  through  the  courtesy  of  the 
Chicago,  Wilmington  &  Franklin  Coal  Co. : 

Chart  1  represents  graphically  the  results  of  127  analyses 
of  samples  from  483  carloads  of  coal.  This  coal  was  all 
shipped  from  the  same  mine,  carefully  sized  through  1  j4-inch 
round  perforation,  and  over  -54 -inch  round  perforation.  Each 
circle  represents  the  result  of  one  analysis.  You  will  note  the 
moisture  variation  is  4  percent,  to  10.8  percent.,  while  the 
average  is  7.83  percent. 

Chart  II 


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BTII       nPIFMT    rHF<;TNMT         ANAirSES  BY  IOWA  STATE  COLLECT 
.I.W.         UniLlll       Ont^mUl  MimnitS  TO  low*  SMTI   1II5I|IUI10«3   JutY  /W»   TO   . 


Chart  2  represents  B.  T.  U.  analyses  for  the  same  samples. 
These  charts  indicate  clearly  that  it  requires  approximately  20 
analyses  before  one  is  reasonably  certain  they  have  average 
conditions.  Undoubtedly,  many  of  the  variations  in  analysis 
are  made  in  the  sampling. 

Chart  3  represents  B.  T.  U.  values  for  coal  shipped  from 
the  same  mine  to  State  institutions  in  Illinois  and  Iowa  during 
the  same  year.  The  B.  T.  U.  values  have  been  calculated  to 
a  "moisture  and  ash  free"  basis  for  better  comparison  of 
laboratory  results.  Note  that  the  averages  of  the  two  labora- 
tories do  not  check  by  about  2  percent. 


196     PURCHASING  PRINCIPLES  AND  PRACTICES 

Chart  III 


15 


itA 


14 


_  UNIVERSITY     OF     ILLINOIS _ 

55  ANALYSES,  340  CARLOADS  fiEPRESEMTED 


.IOWA     STATE     COLLEGE 

14*  ANALYSES,  576  CARLOADS  REPRESENTEO 


ORIENT  B.T.U.  ASH  &  moisture  free 


COMPARISON      OF      ANALYSES      BY 

UNIVERSITY     OF     ILLINOIS      ANO 

IOWA      STATE      COLLEGE 


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Chart  4  represents  the  variation  in  settlement  price  under 
so-called  B.  T.  U.  contracts.  For  this  chart  136  analyses  were 
averaged.  The  price  was  calculated  for  the  average  analysis 
on  a  basis  of  40,000  B.  T.  U.  for  one  cent,  then  the  price  for 
each  individual  analysis  was  calculated  on  a  basis  of  40,000 
B.  T.  U.  for  one  cent.  The  difference  between  the  price  for 
each  analysis  and  the  average  price  was  divided  by  the  price 
for  the  average.  The  result  was  expressed  in  percentage,  then 
the  various  results  were  arranged  in  a  set  order,  the  report 
showing  the  lowest  price  being  placed  first,  the  highest  price 
being  placed  last,  and  the  other  arranged  in  proper  position 
between. 

This  chart  is  typical  of  others  prepared  in  a  similar  way. 
Variations  are  undoubtedly  brought  about  by  the  fact  that 
the    one    preparing    the    sample   could    include    an    excessive 


COAL  ANALYSIS  A  GUIDE  ONLY 


197 


amount  of  ash  or  moisture  far  more  readily  than  he  could 
exclude  these  items,  with  the  result  that  the  quality,  as 
determined  by  the  laboratory,  was  quite  poor. 


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Chart  5  was  prepared  to  illustrate  the  influence  of  sampling. 
In  this  case  there  were  51  analyses  made  from  original  sam- 
ples and  settlement  prices  were  calculated  for  each  of  these 
analyses.  Later,  so-called  duplicate  samples,  prepared  at  the 
same  time  the  originals  were  made,  were  analyzed,  and  prices 
based  on  the  results  of  the  second  analyses  calculated. 

The  difference  in  cents  between  the  price  calculated  from 
the  results  of  the  original  analyses  as  compared  with  the  price 
for  the  duplicate  analyses,  was  divided  by  the  price  deter- 
mined from  the  original  analyses,  and  the  results  expressed  in 
percentages. 

The  various  results  for  all  the  duplicate  samples  were  then 
arranged  in  a  set  order.  The  report  that  showed  the  greatest 
reduction  in  price,  as  compared  with  the  original,  was  placed 
first,  and  then  in  proper  order,  all  the  other  reports,  until  the 
one  showing  the  greatest  increase  in  price  was  placed  last. 

In  May,  1921,  we  purchased  four  cars  of  coal  from  one  of 
the  largest  operators  in  the  southern  Illinois  district.  A  com- 
mercial chemist  of  unquestioned  integrity  was  instructed  to 
have  his  own  assistant  prepare  and  analyze  a  fair  sample  from 
the  four  cars.  There  is  every  reason  to  believe  that  this  sam- 
ple was  taken  carefully,  and  that  the  laboratory  work  was 
accurate.  The  operator  had  another  commercial  chemist  make 
a  separate  analysis  of  each  car. 


198     PURCHASING  PRINCIPLES  AND  PRACTICES 


The  first  analysis  in  the  table  is  of  a  composite  sample  from 
the  four  cars  taken  by  the  chemist  for  the  buyer;  the  next  four 
analyses  are  the  reports  by  the  seller's  chemists  on  each  car: 

1  2  3 

As  Received  Dry  Basis  As  Received  Dry  Basis  As  Received  Dry  Basis 

8.40 


Moisture,  11.04 

Vol.  30.49 

Fixed   Carbon,    41.17 


Ash, 
Sulphur, 
B.  T.  U. 


17.30 

4.07 

10066 


Moisture, 

Vol. 

Fixed    Carbon, 

Ash, 
Sulphur, 
B.  T.  U. 


34.27 
46.28 
19.45 
4.58 
11315 


8.63 
37.53 
38.99 
14.85 
3.77 
10921 
4 
As  Received 
8.67 
36.96 
39.69 
14.68 
3.79 
11008 


41.07 
42.68 
16.25 
4.13 
11953 

Dry  Basis 

40.46 
43.46 
16.08 
4.15 
12053 


37.91 
41.76 
11.93 
3.56 
11401 


41.39 
45.59 
13.02 
3.89 
12446 


5 


As  Received  Dry  Basis 
9.23 


33.99 
40.66 
16.12 
2.93 
10663 


37.45 
44.79 
17.76 
3.23 
11747 


As  a  farther  illustration,  the  following  chart  gives  the  result 
of  16  chemical  analyses  of  coal  of  the  same  size,  delivered 
from  the  same  mine,  over  the  period  May  6  to  June  10, 
1921.  The  first  column  is  the  "as  received"  basis,  the  second 
column  the  "dry"  basis. 


COAL  ANALYSIS  A  GUIDE  ONLY 


199 


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Note  that  each  analysis  totals   100%   without  the   sulphur.     This   is   because 
the  sulphur  is  contained  in  the  other  constituents. 


Chapter  XXIV 

TECHNIQUE  OF  COAL  STORING 

Little  Data  Available. — Considering  the  importance  of  the 
subject,  and  the  amount  of  money  lost  every  year  through 
spontaneous  combustion  of  coal  in  storage  piles,  there  is  very 
little  authoritative  information  available  concerning  the  tech- 
nique of  coal  storage.  There  are  nearly  as  many  methods  of 
coal  storage  as  there  are  types  of  power  plants. 

The  following  paragraphs  are  based  upon  the  rather 
scanty  Government  data,  upon  the  researches  of  H.  H.  Stoek, 
of  the  University  of  Illinois,  and  upon  the  personal 
experiences  and  observations  of  the  author. 

Lignite. — Because  of  the  large  amount  of  moisture  con- 
tained In  lignite,  It  cannot  be  safely  stored  except  under  water. 
Many  lignites  disintegrate  so  rapidly  when  exposed  to  the 
air  that  they  cannot  be  profitably  transported  very  far  in 
open  top  cars,  except  under  unusual  conditions.  The  moisture 
content  of  lignite  Is  about  40  percent.  Lignite  is,  therefore, 
a  negligible  factor  in  the  total  coal  supply,  except  for  local 
consumption  in  districts  where  it  is  mined. 

Bituminous. — Before  the  World  War  the  price  of  bitumin- 
ous coal  was  so  low,  the  supply  apparently  so  great,  and  the 
transportation  system  seemingly  so  adequate,  that  the  storage 
of  bituminous  coal  received  scant  consideration,  and  few 
found  it  necessary  to  accumulate  large  storage  piles.  Because 
of  the  limited  need  for  storage  there  were  few  losses  from 
spontaneous  combustion,  and  the  coal  was  so  cheap  that  these 
losses  were  not  considered  of  much  moment. 

War  Compelled  Storage. — In  preparing  for  the  winter  of 
1917  and  1918,  however,  it  was  considered  not  only  a  wise 
precaution,  but  the  duty  of  every  good  citizen,  to  accumulate 
during  the  summer  and  early  autumn  a  large  part  of  his  coal 
requirements  for  the  coming  winter.  Because  huge  storage 
piles  were  built  up  in  a  more  or  less  haphazard  manner,  heavy 
losses  were  caused  in  many  Instances  by  spontaneous  combus- 
tion. No  one  knew  just  what  to  do,  and  there  was  no  one 
whose  experience  was  broad  enough  to  guide  us  In  the  tech- 
nique of  coal  storage.     The  record  of  these  storage  losses, 

200 


TECHNIQUE  OF  COAL  STORING  201 

and  the  variety  of  deductions  drawn  therefrom,  remind  one  of 
the  statement  of  a  Chicago  jurist  that,  "given  time,  he  could 
cite  authoritative  court  decisions  on  either  side  of  any  case." 

Experience  Failed  to  Teach. — As  a  result  of  the  experience 
of  1917  and  1918  and  the  years  following,  many  men  believe 
they  saved  their  storage  piles  from  burning  by  the  installation 
of  elaborate  ventilating  systems  In  the  coal  piles.  Others  are 
equally  certain  that  the  ventilation  of  storage  piles  Is  the  surest 
way  to  Induce  spontaneous  combustion. 

H.  H.  Stoek,  professor  of  mining  engineering  at  the  Uni- 
versity of  Illinois,  however,  gave  this  problem  much  study, 
and  has  reduced  the  problem  to  somewhat  more  simple  terms 
by  a  careful  classification  of  the  coal  piles  which  burned,  and 
those  which  did  not  burn. 

Prof.  Stoek's  Conclusions  Summarized. — His  conclusions 
are  presented  In  a  pamphlet  published  March  4,  1918,  as 
Bulletin  No.  27,  of  the  University  of  Illinois.  They  may  be 
summarized  as  follows: 

1.  The  determining  factor  Is  not  so  much  the  kind  of  coal 
as  its  size  and  preparation. 

2.  As  spontaneous  combustion  Is  due  to  the  heat  generated 
by  the  oxidization  of  the  coal,  there  are  two  methods  of 
preventing  or  retarding  the  generation  of  this  heat. 

A.  Exclude  all  air  from  the  pile. 

B.  See  that  the  pile  is  so  well  ventilated  that  the  free  cir- 
culation of  air  will  carry  off  the  heat  as  fast  as  it  Is 
generated. 

It  appears,  therefore,  that  prepared  sizes  of  coal  from 
almost  any  district  can  be  safely  stored  If  the  sizes  are  not 
mixed  In  the  pile,  because  the  air  can  freely  circulate  through 
the  mass  of  the  coal  pile,  and  so  carry  off  any  surplus  heat  as 
fast  as  It  is  generated. 

Power  Plant  Experience. — W,  L.  Abbott,  chief  engineer 
of  the  Commonwealth  Edison  Co.  of  Chicago,  is  quoted  on 
this  subject  as  follows: 

"The  experience  of  the  Commonwealth  Edison  Co.  after 
storing  large  amounts  of  all  varieties  of  coal,  and  particularly 
Illinois  coals,  for  a  number  of  years,  may  be  summarized  as 
follows : 

"Nearly  any  coal  which  has  gone  over  a  1^-inch  screen 
can  be  stored.    Any  size  of  coal  with  duff  left  in  will  heat. 

"Pea  coal  over  one-half  inch  through  three-fourths  inches 


202     PURCHASING  PRINCIPLES  AND  PRACTICES 

has  been  In  storage  for  more  than  a  year  without  heating. 
Coal  with  screenings  removed  has  been  in  storage  eight  years 
without  firing. 

"Heating  usually  occurs  within  three  months  after  the  coal 
has  been  stocked,  and  the  tendency  to  heat  decreases  rapidly 
after  that  period. 

"Coal  in  storage  piles  shows  no  measurable  loss  of  heating 
power,  although  weathering  reduces  the  lumps  on  the  outside 
of  the  piles  to  slack. 

"As  insurance,  cost  of  handling,  etc.,  are  the  same  for  all 
grades  of  coal,  regardless  of  heat  value,  it  is  more  economical 
to  store  the  better  grades." 

As  the  partial  ventilation  of  a  coal  pile  seems  to  aid  spon- 
taneous combustion,  the  addition  of  even  the  most  elaborate 
ventilation  systems  would  seem  to  add  to  the  danger,  because 
it  is  manifestly  impossible  to  really  ventilate  the  whole  pile 
unless  the  pile  itself  is  so  constituted  that  the  air  freely 
circulates,  as  in  a  pile  of  egg  coal. 

Storage  of  Screenings. — The  University  of  Chicago  has 
stored  screenings  for  many  years  in  amounts  varying  from 
1,000  to  10,000  tons  with  the  following  results: 

1.  Inch  and  a  quarter  Pike  County,  Indiana,  screenings 
were  frequently  stored  nine  feet  high  during  the  winter  months 
with  only  occasionally  a  slight  loss  from  fire. 

2.  The  same  screenings  when  mixed  with  coal  from  other 
parts  of  Indiana  caused  constant  difficulty. 

3.  Illinois  and  Indiana  screenings  when  mixed  usually 
fired.  A  factor  to  be  considered  is  the  tendency  of  the 
pile  of  prepared  coal  to  disintegrate  under  the  process  of 
Weathering.  If  a  pile  of  egg  coal  Is  from  a  district  whose 
coal  tends  to  disintegrate  readily  after  being  exposed  to  the 
air,  it  is  quite  evident  that  after  a  few  days  you  will  have,  not 
a  pile  of  egg  coal,  but  a  pile  of  egg  coal  mixed  with  slack 
formed  by  the  weathering  process.  This  slack  tends  to  fill  the 
interstices  between  the  coal,  retards  the  circulation  of  air 
through  the  pile,  and  so  adds  to  the  danger  of  spontaneous 
combustion.  Because  of  this  it  Is  well  to  attempt  to  store 
coal  from  only  the  best  districts. 

4.  When  coals  from  different  parts  of  Illinois  were  mixed 
they  usually  fired. 

5.  Inch  and  a  quarter  or  two-inch  screenings  taken  from 
the  same  mine  in  southern  Illinois,  piled  on  dry  ground  dur- 


TECHNIQUE  OF  COAL  STORING  203 

ing  dry  weather,  not  more  than  nine  feet  high  with  no 
ventilating  devices  of  any  kind,  have  never  fired  yet. 

There  seems  to  be  no  reasonable  doubt  that  the  presence  of 
straw,  bits  of  wood  or  pieces  of  oily  waste  increase  the  ten- 
dency to  spontaneous  combustion.  The  presence  of  a  steam 
pipe  or  a  sewer  carrying  warm  sewage  under  or  near  the  coal 
pile  often  raises  the  temperature  just  enough  to  cause  fire. 

Handling  Coal  Pile  Fires/ — "Opinions  differ  widely  con- 
cerning the  critical  or  dangerous  temperature  in  a  coal  pile. 
Parr  says,  'Bituminous  coal  can  be  stocked  without  apprecia- 
ble loss  of  heat  value  provided  the  temperature  is  not  allowed 
to  rise  above  180  degrees  F.'  How  near  to  this  temperature 
a  pile  should  be  allowed  to  heat  is  largely  a  matter  of  judg- 
ment. If  the  rate  of  rise  in  temperature  is  decreasing  rap- 
idly, it  may  be  safe  to  allow  the  temperature  to  approach  180 
degrees,  but  if  the  rise  is  steady  and  regular,  it  is  wise  to  load 
out  the  pile  before  this  danger  point  is  reached.  The  extent 
of  rise  allowable  also  depends  upon  the  means  available  for 
loading  out.  At  a  plant  equipped  with  a  large  grab  bucket, 
or  other  means  for  rapidly  handling  the  .coal,  a  higher  tem- 
perature can  be  permitted  than  in  cases  in  which  a  considera- 
ble period  is  necessary  to  load  out  the  coal.  A  person  in 
charge  of  a  certain  kind  of  coal  under  certain  climatic  condi- 
tions will,  with  a  little  experience,  be  able  to  determine  the 
danger  point.  It  is  impossible  to  set  any  critical  temperature 
which  will  apply  to  all  coals  under  varying  storage  conditions. 
One  very  safe  rule  is  to  be  ready  to  move  the  coal  if  the 
temperature  reaches  150  degrees  F.  and  to  load  it  out  if  the 
temperature  rises  to  175  degrees. 

"Water  has  often  not  proved  effective  in  putting  out  fires, 
doubtlessly  because  of  the  fact  that  it  was  not  applied  in  suffi- 
cient quantities  to  cool  the  entire  mass  thoroughly.  An  insuf- 
ficient amount  of  water  will  aggravate  rather  than  stop  an 
incipient  fire.  One  large  pile  in  Chicago  was  soaked  as  com- 
pletely as  possible  with  streams  from  river  fire  tugs,  and 
while  the  fire  was  at  the  time  apparently  extinguished,  it  be- 
gan burning  again  within  two  or  three  days.  If  the  coal  can 
be  spread  out  and  thoroughly  saturated  with  water,  the  fire 
can  be  extinguished,  but  often  there  is  not  sufficient  ground 
available  to  permit  proper  spreading. 

'The  quoted  paragraphs  are  from  Bulletin  No,  27,  University  of  Illinois, 
pp.  35  and  36. 


204     PURCHASING  PRINCIPLES  AND  PRACTICES 

"In  a  private  communication,  Dr.  J.  B.  Porter  says:  'I  fully 
appreciate  the  fact  that  nearly  everybody  experienced  in  the 
storage  of  coal  objects  to  the  use  of  water  for  quenching  fires 
in  storage  piles.  I  express  scepticism  as  to  the  harmfulness 
of  water-quenching.  Recent  information  strengthens  this 
scepticism,  and  I  have  come  across  several  cases  of  successful 
fire-fighting  by  the  intelligent  use  of  water.  The  fuel  agent 
of  the  Canadian  Pacific  Railway  states  that  he  always  recom- 
mends the  use  of  water,  if  the  fire  is  a  small  one,  and  particu- 
larly if  it  is  detected  in  an  incipient  stage.  His  practice  is  to 
locate  the  hot  spot  by  driving  test  rods  into  the  pile,  and  then 
to  dig  a  pit  one  or  two  feet  deep  right  over  the  center  of 
trouble;  to  drive  and  pull  pointed  rods  or  open  pipes  from  it 
down  into  the  heating  mass,  and  then  to  fill  the  pit  with  water, 
thus  quenching  the  fire  at  its  very  center.  At  the  same  time, 
if  the  fire  is  a  large  one,  he  surrounds  the  whole  heated  part 
with  a  water  curtain,  made  by  digging  a  ring  ditch  one  or  two 
feet  deep,  and  perforating  its  bottom  with  a  row  of  holes  as 
in  ventilation.  This  ditch,  like  the  central  hole,  is  kept  full 
of  water  from  the  hose,  and  if  there  is  any  tendency  for  the 
fire  to  be  driven  outward  from  the  center,  it  is  quenched  by 
the  water  curtain. 

"  'This  method  of  putting  out  a  fire  is,  of  course,  costly, 
but  it  is  enormously  quicker  and  less  costly  than  that  of  dig- 
ging out,  and  results  in  far  less  loss  of  material.  Personally, 
I  am  confident  that  it  will  prove  successful  in  any  ordinary 
case.' 

"Inert  gases,  such  as  carbon  dioxide,  have  been  tried  as 
fire  extinguishing  agents." 

Deterioration  of  Coal  from  Storage. — In  the  early  days  of 
coal  storage,  when  coal  was  cheap,  most  engineers  used  to  esti- 
mate a  loss  of  10  to  15  percent,  in  heat  value  because  of 
weathering.  Because  of  this  it  is  rather  surprising  to  note  the 
following  statement  from  the  University  of  Illinois  Bulletin 
No.  27: 

"The  loss  of  heating  value  resulting  from  storage  is  com- 
paratively small,  and  Parr  says  with  regard  to  this:  "Bitumin- 
ous coal  can  be  stocked  without  appreciable  loss  of  heat  values 
provided  the  temperature  is  not  allowed  to  rise  above  180 
degrees  F.  In  fact,  there  is  no  appreciable  evolution  of  CO^ 
at  temperatures  below  260  degrees  F.  The  indicated  heat 
loss  per  pound  of  coal  is  due  more  largely  to  an  increase  in 


TECHNIQUE  OF  COAL  STORING 


205 


weight  of  a  unit  mass  of  coal  resulting  from  the  absorption  of 
oxygen,  rather  than  from  an  actual  deterioration  or  loss  of 
heat  units.  .  .  .  Under-water  storage  prevents  loss  of 
heat  value." 

According  to  detailed  values  given  by  Parr  and  summarized 
in  the  following  table,  the  indicated  loss  of  heating  value  is 
relatively  low. 

Decrease  in  Heating  Value,  B.T.U.,  of  Illinois  Coals. 


NUT 

SCREENINGS 

NUT 

SCREEN- 
INGS 

Coal  Tested  and 
Length  of  Time  Stored 

Exposed 
Bins 

Covered 
Bins 

Exposed 
Bins 

Covered 
Bins 

Under 
Water 

Under 
Water 

Percent 

Percent 

Percent 

Percent 

Percent 

Percent 

Stored  1  Year 

Williamson  County 

Vermillion  County 

Sangamon  County 

Stored  3  Years 
Williamson  County 

0.84 
2.13 
3.15 

2.09 
4.98 
4.54 

3.04 
5.49 
6.49 

1.64 
2.77 
4.12 

3.60 
6.23 

3.60 
6.39 
6.81 

1.37 
3.92 
5.14 

2.11 
8.48 
7.11 

3.96 

10.83 

6.85 

1.35 

4.46 
4.52 

3.73 
10.47 
10.48 

4.31 

0.93 
2.00 
1.83 

0.57 
2.72 
0.86 

Vermillion  County 

Sangamon  County 

Stored  6  Years 
Williamson  County 

Vermillion  County 

Sangamon  County 

10.81 

After  a  period  of  one  year  in  storage,  the  loss  averaged  for 
nut  coals  and  screenings  from  Williamson,  Sangamon  and  Ver- 
million counties,  only  about  3  or  3y2  percent.  Coals  vary 
in  this  respect,  those  from  Southern  Illinois  showing  less 
change  than  those  from  Central  Illinois,  and  this  difference 
increases  with  the  length  of  time  in  storage;  that  is,  the  coals 
which  show  a  small  decrease  in  heating  value  at  first  continue 
to  show  a  relatively  small  decrease  as  time  goes  on. 

More  Facts  Regarding  Deterioration. — Decrease  in  heat- 
ing value  is  consistently  greater  with  screenings  than  with 
screened  nut,  according  to  Parr's  tests  of  Illinois  coals. 

Coal  stored  in  open  bins  shows  consistently  a  lower  per- 
centage of  loss  of  heating  value  than  coal  stored  under  cover, 
due  no  doubt  to  the  oxidation  of  the  sulphur  when  exposed  to 
the  air,  and  its  subsequent  leaching  out. 


206     PURCHASING  PRINCIPLES  AND  PRACTICES 

Experiments  made  by  the  Bureau  of  Mines  upon  larger 
samples  of  coal  gave  the  following  results: 

"The  amount  of  deterioration  of  coal  in  heating  value 
during  storage  has  commonly  been  overestimated.  Except 
for  the  sub-bituminous  Wyoming  coal,  no  loss  was  observed 
In  outdoor  weathering  greater  than  1.2  percent,  in  the  first 
year,  or  2.1  percent,  in  two  years.  The  Wyoming  coal  suf- 
fered somewhat  greater  loss,  2  to  3  percent.  In  the  first  year 
and  as  much  as  SS  percent,  in  three  years." 

Factor  in  Storage. — Therefore,  as  the  coals  which  do  not 
show  excessive  degradation  during  storage  also  show  heat 
losses  of  only  1  percent,  to  3  percent.,  the  storing  of  coal 
resolves  Itself  into  the  following  factors : 

A.  Necessity  of  storage  in  order  to  assure  an  ade- 
quate supply.  This,  of  course,  depends  upon  the 
location  of  the  plant  and  the  condition  of  the  trans- 
portation. 

B.  Variations  of  cost  between  seasons  of  the  same 
year — whether  the  price  shows  marked  variations 
consistently. 

C.  Cost  of  rehandling. 

D.  Adequacy  and  cost  of  storage  facilities. 

E.  Available  funds  for  investment  in  coal  and  the 
interest  charged. 

F.  Could  these  funds  be  used  to  better  advantage 
elsewhere? 

Conclusion. — Generally  speaking,  enough  coal  should  be 
placed  In  storage  to  serve  as  an  insurance  against  failure  to 
receive  regular  shipments — usually  30  to  60  days'  supply. 
Only  under  unusual  circumstances  v/IU  it  pay  to  accumulate  a 
larger  stock  pile.  Usually  the  rehandling  cost,  degradation, 
interest  and  other  charges  will  offset  any  theoretical  saving 
achieved  by  the  accumulation  of  large  stocks  of  coal. 


Chapter  XXV 

PROBLEMS  IN  STEEL  BUYING 

Scope  of  Chapter. — As  every  purchasing  agent  buys  more 
or  less  material  made  of  iron  and  steel,  he  should  know  enough 
about  their  history  and  development,  and  the  modern  proc- 
esses of  manufacture,  to  enable  him  to  buy  this  class  of  product 
to  the  best  possible  advantage.  It  is  by  no  means  unusual  for 
a  purchasing  agent  of  many  years'  experience  to  make  costly 
blunders  in  handling  purchases  of  this  sort  because  he  lacks  a 
knowledge  of  the  basic  principles  of  the  manufacture  of  these 
products. 

It  is,  of  course,  impossible  adequately  to  cover  here  the 
technique  of  the  whole  field  of  the  manufacture  of  iron  and 
steel.  We  shall  cover  only  the  basic  principles,  and  point  out 
only  the  more  obvious  difficulties  and  the  most  common  stum- 
bling-blocks. 

Chemistry. — Much  of  the  manipulation  of  iron  depends 
upon  the  simple  chemical  law  that  the  action  of  any  acid  tends 
to  be  neutralized  by  a  base  or  an  alkali,  and  that  the  resultant 
of  the  reaction  of  an  acid  with  a  base  is  a  neutral  salt.  Both 
acids  and  bases  vary  in  strength  and  in  the  intensity  and  ra- 
pidity of  reaction.  The  reaction  of  a  small  quantity  of  acid 
with  a  large  quantity  of  base  results  in  a  slightly  lessened 
amount  of  base  and  a  slight  amount  of  a  salt.  These  reac- 
tions are,  of  course,  determined  by  the  exact  properties  and 
exact  strength  of  both  the  acids  and  bases,  and  are  interpreted 
in  the  terms  of  chemical  formulae,  with  which  we  are  not  now 
concerned. 

Common  Elements. — The  common  elements  met  with  in 
the  manufacture  of  steel  are: 

1.  Iron. 

2.  Carbon  exists  in  iron  in  two  forms,  combined  and  un- 
combined  in  the  form  of  flake  graphite. 

3.  Phosphorus  is  found  in  varying  quantities  in  all  iron 


ores. 


Silicon  is  found  in  most  iron  ores,  in  various  forms. 
Oxygen,  which  exists  in  the  air  in  the  free  or  uncom- 

207 


208     PURCHASING  PRINCIPLES  AND  PRACTICES 

bined  form,  and  in  limestone,  clay,  quartz,  iron  ore,  and  other 
substances  in  the  combined  form. 

6.  Hydrogen,  which  is  contained  in  the  moisture  of  the 
air,  and  in  the  gases  used. 

7.  Other  elements  which  play  a  more  or  less  important 
part  in  the  manufacture  of  steel  are  aluminum,  chromium, 
manganese,  calcium,  and  magnesium. 

Refractories. — The  purchasing  agent  for  a  steel  mill  must 
know  a  great  deal  about  the  various  kinds  of  refractories  and 
the  uses  to  which  they  may  safely  be  put,  and  those  to  which 
they  are  not  adapted.  It  is  true  that  the  matter  of  specifying 
the  type  of  refractories  required  usually  lies  outside  the  prov- 
ince of  the  purchasing  agent,  but  the  buyer  who  is  really 
seeking  to  serve  his  firm  to  the  best  possible  advantage  must 
know  the  purpose  for  which  every  item  is  purchased,  in  order 
intelligently  to  cooperate  with  the  operating  head  of  the  mill, 
and  in  order  to  suggest  workable  substitutes.  Briefly  the 
specifications  for  a  perfect  refractory  are : 

1.  Must  not  soften  or  fuse. 

2.  Must  not  crumble  or  crack. 

3.  Must  exhibit  the  minimum  amount  of  contraction  and 
expansion. 

4.  Must  be  non-conductor  of  heat. 

5.  Must  be  impermeable  to  gases  and  liquids. 

6.  Must  resist  abrasion. 

7.  Must  not  react  chemically  with  other  substances. 

The  man  who  can  discover  a  refractory  that  will  measure 
up  to  these  seven  requirements  will  make  a  very  great  con- 
tribution to  the  progress  of  the  human  race,  and  will  earn  a 
good  deal  of  money  for  himself. 

The  Three  Classes. — Refractories  are  divided  into  three 
classes,  basic,  acid,  and  neutral.  To  the  first  class  belong 
bauxite,  dolomite,  magnesium,  and  lime.  All  acid  refractories 
owe  their  acid  quality  to  the  presence  of  silica  in  varying 
forms  and  In  varying  quantities.  The  ideal  furnace  lining 
would,  of  course,  be  a  neutral  material  which  would  permit 
the  furnace  to  be  operated  on  either  the  basic  or  acid  process. 
Only  two  such  substances — graphite  and  chromite — are  now 
known,  and  it  is  not  commercially  possible  to  use  either  for 
large  operations. 


PROBLEMS  IN  STEEL  BUYING 


209 


The  selection  of  a  refractory  for  any  purpose  should  be 
made  only  after  exhaustive  tests  conducted  in  the  laboratory, 
where  actual  working  conditions  to  which  the  refractory  will 
later  be  put  are  duplicated  as  far  as  possible.  These  labora- 
tory tests  determine  the  fusing  point,  resistance  to  compres- 
sion, expansion  and  contraction,  density,  resistance  to  abrasion, 
resistance  to  impact,  and  liability  to  spall. 

Fuel. — In  the  production  of  steel,  large  quantities  of  fuel 
must,  of  course,  be  used.  As  nearly  every  purchasing  agent 
buys  more  or  less  fuel,  perhaps  a  brief  discussion  of  the  fuel 
problems  of  the  steel  mill  will  not  be  out  of  place  here.  The 
following  excellent  chart  of  fuels  is  taken  from  page  66  of 
"The  Making,  Shaping,  and  Treating  of  Steel,"  published  by 
the  Bureau  of  Instruction  of  the  Carnegie  Steel  Co.  For 
the  purpose  of  this  chapter  it  is  only  necessary  to  add  that 
the  principal  fuels  used  in  the  manufacture  of  steel  are  coke 
and  gases,  both  natural  and  manufactured. 

Classification  of  Fuels 


Carbon-Hydrogen  Fuels 


Incidental  Fuels 


„.      ,    /Hard 
^°°d   \Soft 

n           /New 

^'''   (old 

Natural    ■ 

,.     .    /New 
L.gn.te\Q,j 

Solid 

fBituminous(^°'^'"?  ,  . 
CoaH                       iNon-Coking 

l- Anthracite 

> 

( 

Briquettes 

Pulverized  Coal 

Prepared 

/Charcoal 

Natural 

Carbonized  Fuel j  ^^^^^f  Beehive 

iBv-Product 

Liquid   . 

Petroleum 

Prepared  '^ 

Distilled  Oils 

r 

Natural 

Coal  Tar 

Natural  Gas 

r 

Producer  Gas 

Gaseous, 

1 

Blast  Furnace  Gas 

Prepared  J 

Coke  Oven  Gas 

1 

Coal  Gas 

Blue  Gas 

Iron 

Manganese 

Bessemei 

■  Converter 

•  Carbon 
Silicon 
Phosphorus 

Sulphur 

Works 

(Roasting 
\Smelting 

210     PURCHASING  PRINCIPLES  AND  PRACTICES 

Fluxes. — The  purification  of  iron  ore  depends  very  largely 
upon  the  addition  of  the  right  kind  of  fluxes  in  the  right  quan- 
tities. They  accomplish  two  things:  first — they  render  some 
of  the  impurities  more  easily  fusible,  and  second — they  com- 
bine with  other  impurities,  and  so  are  drawn  off  in  the  form 
of  slag. 

Some  of  the  impurities  contained  in  iron  possess  a  marked 
affinity  for  the  iron,  and  can  only  be  separated  by  the  addition 
of  a  flux  for  which  they  have  an  even  greater  affinity.  The 
selection  of  the  right  flux  will,  therefore,  depend  upon  the 
chemical  composition  of  the  iron,  and  the  properties  of  the 
impurities  which  it  contains. 

Basic  and  Acid  Types. — If  the  iron  contains  basic  impuri- 
ties, an  acid  flux  must  be  used;  and  if  the  impurities  are  acid, 
a  basic  flux  will  be  required.  Some  fluxes  do,  however,  pos- 
sess peculiarities.  For  instance,  alumina  may,  under  certain 
conditions,  become  either  an  acid  or  a  base.  Alumina  with 
silica  forms  aluminum  silicate  whch  is  an  acid;  with  sodium  it 
forms  sodium  aluminate  which  is  a  base.  In  conjunction  with 
other  bases  alumina  exhibits  a  tendency  to  form  double  salts 
with  polybasic  acids. 

While  alumina  is  seldom  intentionally  used  as  a  flux,  it  is 
present  In  varying  quantities  in  nearly  all  the  raw  materials 
used  in  the  manufacture  of  steel.  The  most  common  basic 
flux  is  limestone  and  dolomite;  silica  is  the  only  acid  flux. 

Slag. — Blast  furnace  slag  is  used  for  the  manufacture  of 
Portland  cement,  for  road  building,  railroad  ballast,  roof 
covering,  insulating  materials,  fertilizer,  and  for  brick. 

Pig  Iron. — While  the  number  of  purchasing  agents  who 
have  occasion  to  buy  pig  iron  in  large  quantities  is  not  large, 
I  believe  that  a  knowledge  of  the  elementary  principles  of  the 
making,  selling,  and  the  technique  of  purchasing  pig  iron  will 
be  worth  while  for  every  purchasing  agent.  Certainly  the 
student  who  hopes  some  day  to  direct  the  expenditure  of  mil- 
lions of  dollars  of  other  people's  money  cannot  have  too  much 
accurate  information  upon  any  subject. 

Pig  Iron  Sales. — While  pig  iron  is  produced  in  large  quan- 
tities in  this  country,  comparatively  little  of  this  iron  ever 
finds  its  way  into  the  market  in  that  form.  Pig  iron  is  in 
reality  the  intermediate  state  in  the  manufacture  of  steel,  and 
the  largest  producers  of  pig  iron  seldom  have  any  to  sell, 
because  they  convert  all  their  normal  output  into  steel,  and 


PROBLEMS  IN  STEEL  BUYING  211 

vend  it  in  that  form.  Owing  to  this  condition  the  manufacture 
of  commercial  pig  iron  is  largely  in  the  hands  of  relatively 
small  concerns.  In  fact,  many  of  these  producers  are  so 
small,  and  their  output  is  so  limited,  that  they  simply  can- 
not afford  to  support  a  sales  organization.  Because  of  this, 
and  because  of  the  economic  advantages  this  method  offers, 
the  large  volume  of  commercial  pig  iron  is  sold  through 
brokers. 

Brokers  and  Trade  Customs. — Some  of  these  brokers  han- 
dle the  output  of  many  furnaces.  Some  of  the  furnaces  use 
the  services  of  one  broker  for  a  while,  and  then  switch  to 
another.  Some  furnaces  are  represented  by  a  broker  in  sev- 
eral localities,  in  order  to  take  advantage  of  the  most 
advantageous  conditions  in  each  district. 

The  custom  of  paying  the  brokers  on  the  basis  of  a  flat 
commission  per  ton  instead  of  on  a  percentage  basis  led  to 
the  growth  of  a  peculiar  trade  abuse.  As  the  amount  of 
money  the  broker  received  did  not  depend  upon  the  price  he 
received  for  the  pig  iron,  he  had  no  real  interest  in  keeping 
the  selling  price  up.  This,  in  turn,  led  to  the  "bid  or  offer" 
method  of  purchase  and  sale. 

When  a  broker  learned  that  a  plant  was  in  the  market  for 
a  thousand  tons  of  pig  iron  of  a  certain  specification,  he 
quoted  the  price  the  furnace  had  instructed  him  to  quote.  If 
that  price  did  not  secure  the  business,  he  then  asked  the  pur- 
chasing agent  to  make  him  a  bona-fide  offer  which  he  could 
submit  to  the  furnace. 

Inexperienced  Buyers. — One  of  the  common  methods  used 
by  the  pig  iron  broker  to  try  out  the  new  purchasing  agent 
was  to  ask  for  an  offer  on  a  given  lot  of  pig.  If  the  market 
price  was  $19  per  ton,  and  the  purchasing  agent  offered 
$18.50  or  $18.75,  the  broker  at  once  concluded  that  the  new 
buyer  at  least  knew  something  about  pig  iron,  and  acted 
accordingly. 

If,  however,  the  new  bruyer  were  to  look  wise  and  offer  only 
$16  a  ton,  the  broker  at  once  knew  that  he  was  green  and 
acted  accordingly.  It  is  perhaps  needless  to  say  that  the 
majority  of  well  established  brokers  would  at  once  proceed 
to  give  the  buyer  valuable  information  concerning  the  pig  iron 
market,  and  would  thereby  lay  the  foundation  for  a  friendship 
which  might  prove  very  profitable  to  both  of  them. 

There  are,  of  course,  always  some  brokers  of  the  other 


212     PURCHASING  PRINCIPLES  AND  PRACTICES 

type  who  would  take  advantage  of  the  buyer's  uiexperience  to 
attempt  to  get  an  unduly  high  price  for  their  iron.  On  the 
other  hand  some  purchasing  agents  have  been  so  disagreeable 
to  salesmen,  and  so  sure  that  they  knew  all  there  was  to  know 
about  a  given  commodity,  that  they  have  more  than  justified 
all  the  rough  treatment  meted  out  to  them  by  the  salesmen 
and  brokers  during  the  past  few  years. 

Analysis  of  Pig  Iron. — Let  us  now  consider  briefly  the 
nature,  characteristics,  possibilities  and  limitations  of  pig  iron. 
As  pig  iron  is  never  used  for  anything  except  ballast  until  it 
has  been  refined  and  converted  into  some  other  form,  and  as 
the  service  which  the  finished  product  may  render  is  limited 
not  only  by  the  various  processes  through  which  the  iron  is 
put,  but  to  a  greater  or  lesser  extent  by  the  chemical  com- 
position of  the  iron,  it  is  highly  desirable  that  the  purchasing 
agent  know  the  significance  of  these  various  substances  which 
are  found  in  pig  iron. 

In  the  solid  form,  iron  represents  a  complex  mixture  of 
alloys,  compounds,  and  uncombined  elements.  Pure  iron 
usually  constitutes  91  to  94  percent,  of  the  whole.  Of  the 
remainder,  3  to  4  percent,  is  carbon,  .50  percent.,  to  3  per- 
cent, is  silicon,  less  than  .065  is  sulphur,  .040  to  2  percent, 
is  phosphorus,  and  .02  to  1.50  percent,  is  manganese. 

Impurities  in  Iron, — When  pig  iron  contains  more  than  4 
percent,  of  carbon,  it  becomes  very  brittle.  Carbon  appears 
in  pig  iron  in  the  combined  form,  and  in  the  uncombined  form, 
the  free  form  consisting  of  small  flakes  of  free  graphite.  Ex- 
perts are  not  quite  agreed  concerning  the  exact  effect  of 
sulphur  in  pig  iron,  but  foundry  men  are  quite  agreed  that  it 
is  not  desirable  to  use  pig  iron  containing  more  than  .05  per- 
cent, sulphur. 

A  small  percentage  of  phosphorus  is  desirable  in  making 
cast  iron,  because  it  makes  the  iron  flow  much  more  freely, 
eliminates  blowholes,  and  decreases  shrinkage;  but  the  tensile 
strength  of  iron  containing  more  than  one-half  of  1  percent, 
phosphorus  is  greatly  reduced. 

The  student  who  wishes  an  accurate  chart  of  the  upper  and 
lower  limits  of  the  various  impurities  in  pig  iron  will  find  a 
very  useful  chart  on  page  120  of  "The  Making,  Shaping,  and 
Treating  of  Steel,"  published  by  the  Bureau  of  Instructions  of 
The  Carnegie  Steel  Company  and  referred  to  above. 


PROBLEMS  IN  STEEL  BUYING 

The  Metallic  Products  of  the  Blast  Furnace 


213 


Range  in  Percent. of 

Grade 

Silicon 

Sulphur 

Phosphorus 

Manganese 

Total  Carbon 

No.  1  Foundry. 
No.  2  Foundry. 
No.  3  Foundry. 
Malleable  Cast- 
ing   

2.5  to    3.0 
2.0  to    2.5 
1.5  to    2.0 

.75  to  1.5 
About     1.50 
1.00  to    1.50 
Under    1.00 

2.00 
Under     1.25 
About    1.00 

.50  to    1.00 
8.0   to  15.00 
8.0  to  15.00 

Under   .036 
.045 
.060 

.050 
1.00 
.050 
.050 

.030 
.050 
.050 

.030 
.070 
.010 

.25    to  1.00 
.25    to  1.00 
.25    to  1.00 

.2 
1.0 
0.1  or  less 

Under       1.00 
1.00 
1.00 

1.00 

1.00 

About        .50 

Under        .50 

1.00 
1.00  to    2.50 
18.0   to  22.0 

78.00  to  82.00 

3.00  to  4.25 
3.50  to  4.25 
3.50  to  4.25 

3.50  to  4.25 

Forge 

3.50  to  4.25 

Acid  Bessemer 

3.50  to  4.25 
3.50  to  4.25 

Low  Phos.  Acid 

Iron 

Basic 

.030 

.100  to  1.00 

.150 

.10   to   .30 
.10   to   .50 
.15 

3.50  to  4.25 
3.50  to  4.25 

Spiegel 

Ferro-Manga. 
nese 

5.0   to  6.0 

5.0   to  7.0 
1.00  to  2.00 

Silico-Spiegel  . . 

15.00  to  20.00 

Blast  Furnace. — While  the  actual  work  of  producing  pig 
iron  calls  for  the  setting  up  of  blast  furnaces,  and  while  the 
profitable  operation  of  these  furnaces  calls  for  considerable 
skill,  and  a  thoroughgoing  knowledge  of  both  the  physical 
properties  of  iron  ores  and  the  chemical  reactions  which  may 
be  expected  in  the  operation  of  the  furnaces,  the  non-technical 
description  of  the  process  of  making  pig  iron  is  very  simple. 

The  blast  furnace,  which  is  in  reality  nothing  more  than  a 
huge  brick  stack,  is  first  heated  up  and  then  filled  with  coke, 
limestone,  and  iron  ores,  of  known  analyses  and  quantities. 
The  heat  generated  by  the  burning  coke  aided  by  the  heat 
generated  by  the  gases,  melts  the  iron.  The  molten  iron,  con- 
taining a  greater  or  lesser  amount  of  impurities,  collects  in  the 
bottom  of  the  furnace,  and  is  periodically  drawn  off  and  cast 
into  pigs. 

The  limestone  and  other  fluxes  unite  with  the  impurities 
in  the  iron,  and  rise  to  the  top  as  slag.  All  during  the  process, 
while  the  iron  is  running  out,  small  samples  are  taken,  and 
tested  both  chemically  and  physically.  Because  of  the  high 
temperature  required  for  the  operation  of  a  blast  furnace,  and 
because  of  the  difficulties  encountered  in  closing  down  and 
opening  up  again,  a  blast  furnace  usually  makes  one  continuous 
run  from  the  time  it  is  first  put  into  commission  until  it  is 
burned  out  and  re-lined. 


214     PURCHASING  PRINCIPLES  AND  PRACTICES 

Bessemer  Furnace. — One  of  the  commonest  and,  on  the 
whole,  one  of  the  most  satisfactory  methods  of  purifying  pig 
iron  for  making  castings  and  ingots,  and  for  other  com- 
mercial purposes,  is  known  as  the  Bessemer  process.  Briefly, 
and  shorn  of  all  the  technicalities,  the  process  depends  upon 
the  principle  that  the  introduction  of  a  blast  of  air  through 
the  bottom  of  a  vessel  containing  molten  iron  generates 
heat  because  it  supplies  the  oxygen  necessary  to  burn  out  the 
carbon  and  other  impurities  in  the  iron.  In  general  the  prac- 
tice is  to  continue  the  blast  of  air  until  all  the  impurities  are 
burned  out,  and  the  vessel  contains  very  nearly  pure  iron. 

Various  alloys  are  then  added  in  the  quantities  required. 
The  furnace  master  determines  by  the  length  and  colour  of 
the  flame  just  when  the  heat  has  reached  the  right  stage. 
Here,  again,  the  results  desired  and  the  results  obtained,  are 
checked  by  frequent  analyses  and  physical  tests. 

Steel. — Open  Hearth. — As  opposed  to  the  Bessemer  proc- 
ess, we  have  the  open  hearth  process  of  purifying  iron.  In 
this  process  the  heat  is  obtained  by  the  introduction  of  blasts 
of  burning  gases  forced  over  the  iron,  instead  of  a  blast  of 
air  forced  up  from  the  bottom.  This  method  has  an  advan- 
tage in  that  the  temperature  of  the  bath  can  be  more  accurately 
controlled,  and  the  process  may,  therefore,  be  lengthened  out 
so  that  only  those  impurities  which  are  not  desired  will  be 
eliminated.  This  makes  it  possible  to  obtain  iron  with  a 
greater  range  in  analysis. 


PROBLEMS  IN  STEEL  BUYING 


215 


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216     PURCHASING  PRINCIPLES  AND  PRACTICES 

Electric  Steel. — The  outstanding  factor  in  the  manufac- 
ture of  steel  by  the  electric  furnace  is  the  utilization  of  the 
heat  generated  by  the  electric  arc.  The  particular  advantage 
of  the  electric  furnace  lies  in  the  fact  that  the  heat  may  be 
directly  applied  and  accurately  controlled,  and  that  this  method 
of  heating  makes  it  possible  to  exclude  all  foreign  substances. 

It  is  thus  possible  to  produce  a  steel  of  great  fineness 
and  purity.  Steel  made  by  this  process  may  almost  exactly 
duplicate  steel  made  under  ideal  laboratory  conditions. 

Ingots  and  Their  Defects. — Steel  for  commercial  purposes 
is  shaped  in  many  forms,  and  by  many  means,  by  rolling,  press- 
ing, and  hammering;  and  each  method  has  its  advantages  and 
its  disadvantages.  There  are  certain  inherent  defects  in  most 
steel  ingots  and  billets  that  the  purchaser  of  steel  and  steel 
products  in  their  various  forms  should  know  about,  and  be 
able  to  recognize.  The  process  of  cooling  an  ingot  is  very 
much  like  the  process  of  freezing  a  cake  of  ice. 

When  the  moulten  steel  is  poured  into  the  mould  it  begins 
to  harden  or  freeze  from  the  outside  first,  because  the  mould 
acts  as  a  conductor  of  heat.  The  metal  contracts  as  it  cools, 
so  there  is  a  constant  tendency  to  form  a  long  opening  in  the 
upright  end  of  the  ingot,  called  a  pipe.  In  fact,  no  method 
has  yet  been  devised  for  the  successful  elimination  of  this 
pipe,  which  does  not  cost  more  than  it  saves.  Because  of  this 
inherent  defect  in  the  ends  of  the  ingots,  the  end  Is  always 
discarded  before  the  steel  is  put  through  the  rolling  mills. 

The  second  common  defect  in  the  finished  ingot  is  the  blow- 
hole. In  the  molten  state,  iron  is  capable  of  absorbing  large 
quantities  of  gases,  and  these  are  given  off  as  the  iron  solidi- 
fies. Some  of  these  gases  become  entrapped  as  the  iron  cools 
and  remain  in  the  form  of  bubbles  which  show  up  in  the 
finished  product  as  blowholes.  The  size  of  these  blowholes 
may  be  very  large  or  very  small.  If  they  are  located  near 
the  center  of  the  ingot,  they  become  closed  by  the  rolling 
process,  and  have  no  ill  effect  on  the  finished  piece.  If,  how- 
ever, they  are  near  the  skin  of  the  Ingot,  and  the  surface  of 
the  blowholes  becomes  oxidized,  the  rolling  process  does  not 
completely  weld  them,  and  they  show  up  later  In  the  form  of 
splinters,  checks,  or  scabs.  The  Inadvertent  inclusion  of 
small  bits  of  slag  in  the  finished  Ingot  shows  up  in  a  similar 
manner. 

Scale. — During  the  rolling  process  more  or  less  scale  forms 


PROBLEMS  IN  STEEL  BUYING  217 

on  the  outside  of  the  ingot  or  slab.  In  order  to  prevent  the 
finished  product  from  showing  pits  on  the  surface,  this  scale 
must  be  removed.  When  working  low  carbon  steel  the  scale 
is  removed  by  spraying  with  water,  and  at  the  same  time 
throwing  quantities  of  salt  on  the  hot  iron.  When  working 
high  carbon  steel,  burlap  sacks  are  thrown  on,  in  addition  to 
the  salt  and  water.  When  working  nickel  steel,  coal  is  used 
in  the  place  of  salt,  and  in  addition  to  burlap  sacks.  In  some 
cases,  brush  and  green  twigs  are  used  in  the  place'  of  the 
burlap  sacks.  This  material  thrown  upon  the  hot  ingot  or 
slab,  is  drawn  under  the  rolls  and  gassified  by  the  heat  from 
the  steel.  In  escaping,  the  gases  get  under  the  scale,  and 
carry  it  off. 

Tears. — In  regulating  the  draught  of  the  rolls  in  the  roll- 
ing mill,  great  care  must  be  exercised.  If  the  draught  is  too 
great,  or  the  ingot  too  cold,  the  action  of  the  rolls  causes 
the  bloom  or  ingot  to  tear  or  split  on  the  edges.  These  tears 
may  be  more  or  less  perfectly  welded  in  the  later  working  of 
the  piece. 

Structural  Changes  in  Steel  in  Work. — Before  leaving 
this  brief  summary  of  first  principles  in  the  manufacture  and 
working  of  steel,  I  believe  some  little  space  should  be  devoted 
to  the  study  of  the  structural  changes  which  take  place  in 
steel  when  it  is  heated  and  when  it  is  cooled,  under  varying 
conditions.  A  thorough  knowledge  of  this  subject  would 
prove  invaluable  to  any  purchasing  agent  who  is  concerned  in 
the  purchase  of  machinery  and  repair  parts.  Every  year  many 
thousands  of  dollars'  worth  of  cracked  and  broken  parts  are 
discarded  upon  the  advice  of  engineers,  which  could  be  re- 
paired at  a  slight  cost,  if  they  were  properly  handled  by  an 
expert  repair  force. 

Carbon. — The  presence  of  carbon  in  steel  in  known  quan- 
tities has  a  remarkable  effect  upon  the  physical  properties 
of  ordinary  steel,  which  Is  made  up  of  three  constituents: 
cementite,  which  is  hard  and  brittle,  but  has  little  tensile 
strength;  pearlite,  which  is  strong,  but  not  ductile;  and  fer- 
rite,  which  has  great  ductility,  but  no  strength.  By  regulat- 
ing the  percentage  of  combined  carbon  in  steel  and  controlling 
the  temperature  and  the  rates  of  cooling,  the  hardness,  brit- 
tleness,  and  tensile  strength  of  the  finished  product  may  be 
accurately  controlled. 

These  physical  changes  take  place  during  certain  stages  in 


218     PURCHASING  PRINCIPLES  AND  PRACTICES 

the  heating  and  cooling  of  the  steel,  which  are,  therefore, 
known  as  the  critical  stages.  By  carefully  observing  steel  while 
cooling,  metallurgists  have  found  that  at  certain  temperatures 
the  rate  of  cooling  is  not  only  retarded,  but  the  mass  of  iron, 
apparently  in  and  of  itself,  generates  heat.  The  generation  of 
this  heat  is  due  to  the  physical  changes  which  are  taking  place 
at  that  particular  temperature. 

If  steel  is  permitted  to  cool  slowly  its  crystals  are  large, 
and  the  cool  metal  is  soft.  If  steel  is  cooled  rapidly,  its 
crystals  are  smaller,  and  the  steel  is  hard.  In  handling  large 
castings,  however,  it  is  not  possible  to  cool  the  entire  body 
rapidly,  because  the  iron  must  cool  from  the  outside.  If  a 
large  casting  is  plunged  into  an  oil  bath,  it  becomes  hard  on 
the  outside  but  remains  soft  inside.  The  rapid  cooling  of  the 
outside,  however,  sets  up  strains  within  the  casting  which 
must  be  relieved  by  annealing  or  reheating.  The  annealing 
process,  if  accurately  controlled,  permits  the  iron  crystals  to 
rearrange  themselves  so  that  the  strain  within  the  piece  is 
relieved. 

Steel  Hardening. — Steel  may  be  hardened  by  heating  to 
a  point  below  its  critical  stage,  and  then  plunging  it  into  a 
bath  of  oil  or  water.  The  piece  may  then  be  toughened  by 
reheating.  The  toughening  process  has  an  advantage  over 
the  annealing  process,  in  that  you  secure  both  strength  and 
ductility.  Case  hardening  is  accomplished  by  heating  the 
pieces  to  be  treated  in  a  box  packed  with  powdered  carbon  in 
various  forms.  By  this  process  the  outer  surface  of  the  iron 
takes  up  a  certain  amount  of  the  carbon  in  which  it  is  packed, 
without  setting  up  a  condition  of  strain  between  the  inner 
and  outer  parts  of  the  piece. 

In  conclusion  may  I  point  out  briefly  the  effect  which  cer- 
tain alloys  have  upon  steel. 

Alloys  and  Their  Effect. — Up  to  1  percent.,  the  addition 
of  each  one-tenth  of  one  percent,  of  carbon  adds  3987  pounds 
to  the  tensile  strength  of  steel,  per  square  inch.  If  carbon  is 
present  to  the  amount  of  1  percent,  or  over,  the  tensile 
strength  is  greatly  reduced.  Manganese  makes  the  steel  roll 
and  forge  better,  and  adds  somewhat  to  the  tensile  strength. 
The  exact  effect  of  sulphur  up  to  one-tenth  of  one  percent, 
is  somewhat  in  dispute.  Phosphorus  adds  to  the  static 
stresses  in  steel,  but  high-phosphorus  steel  does  not  resist  easily 
constant  jarring  and  sudden  strains,    and,    therefore,    high- 


PROBLEMS  IN  STEEL  BUYING  219 

phosphorus  steel  is  satisfactory  for  building  purposes,  but  Is 
unsuitable  for  rails.  A  silicon  content  up  to  .75  percent.  Is 
beneficial.  High-silicon  steel  tends  to  resist  shocks.  The  effect 
of  oxygen  in  steel  is  harmful.  Copper  in  quantities  less  than 
one-half  of  one  percent,  has  no  marked  effect.  Tin  increases 
the  tensile  strength  of  steel,  but  to  a  less  degree  than  either 
carbon  or  phosphorus.  Chromium  is  a  hardening  element, 
while  nickel  adds  to  the  tensile  strength. 

Much  of  the  material  used  in  this  chapter  is  taken  from 
"The  Making,  Shaping,  and  Treating  of  Steel,"  published  by 
the  Bureau  of  Instructions  of  the  Carnegie  Steel  Co.  This 
data  has  been  supplemented  by  selections  from  the  following 
books,  periodicals,  and  official  bulletins: 

BIBLIOGRAPHY  OF  STEEL 

GENERAL 

Morrell,   Daniel    J.,    "Iron    and    Steel    Exhibits." 
Smith,   Joseph   Russell,   "The   Story   of   Iron    and   Steel." 
Spring,   La    Verne   Ward,    "Non-technical   Chats   on    Iron    and    Steel." 
Vosman,  A.,   "Mechanical    and   Other  Properties  of  Iron   and   Steel   in   Con- 
nection with  their  Chemical  Composition." 

Backert,  Adolphus  Otto,  "The  A.  B.  C.  of  Iron  and  Steel." 

TEXT    BOOKS 
Hudson,  Oswald  Freeman,  "Iron  and  Steel,  an  Introductory  Text  Book." 
Richards,  William  Allyn,  "Forging  of  Iron   and  Steel,   an   Elementary  Text 
Book." 

TRADE     JOURNALS 

American    Drop    Forger. 

American   Iron   and   Steel   Institute  Bulletins. 

American   Machine   and   Tool   Record. 

American   Metal   Market   and   Daily   Iron    and   Steel   Report. 

Iron   Age. 

FOUNDRY    PRACTICE 

Sharp,  John,   "Modern   Foundry  Practice." 

METALLURGY 

Edwards,    Charles   Alfred,    "The    Physico-Chemlcal    Properties   of   Steel." 
Harbord,   F.,   "Metallurgy  of   Steel." 
Howe,  Henry  M.,   "Metallurgy  of  Steel." 

White,  G.,  "Metallurgical  Study  of  the  Steel   Base  as  Related  to  Galvaniz- 
ing." 

Bauerman,  Hilary,  "A  Treatise  on  the  Metallurgy  of  Iron." 
Richards,   Joseph   W..    "Metallurgical    Calculations." 
Turner,  Thomas,   "Metallurgy  of  Iron." 

ANALYSIS 

Arnold,  J.,  "Steel  Work  Analysis." 

Blair,  Andrew  Alexander,  "Chemical  Analysis  of  Iron." 

Brearley,   Harry,   "The  Analysis  of  Steel   Works   Materials." 

Konenck,  Lucien  L.  De,  "Practical  Manual  of  Chemical  Analysis  of  Steel." 

Osmond,   Floris,   "The   Microscopic  Analysis  of  Metals." 


220     PURCHASING  PRINCIPLES  AND  PRACTICES 

Crobaugh,  Frank  Lincoln,  "Methods  of  Chemical  Analysis  and  Foundry 
Chemistry." 

Johnson,  Charles  Morris,  "Rapid  Methods  for  the  Chemical  Analysis  of 
Special   Steel  and  Steel  Working  Materials." 

Lord,    Nathaniel    Wright,    "Notes   on    Metallurgical    Analysis." 

"Analyzed  Irons  and  Steels, — Methods  of  Analysis,"  U.  S.  Bureau  of  Stand- 
ards,   (Circular  No.  14.) 

Nesbit,  C.  E.  and  Bell,  M.  L.,  "Practical  Methods  for  Testing  Refractory 
Fire  Brick."     Proceedings  of  the  A.  S.  T.  M.     Vol.  XVII,  1916. 

HEAT     TREATMENT 

Bullens,  Denison  K.,  "Steel  and  Its  Heat  Treatment." 
Casterlin,   Warren   S.,   "Steel   Working   and   Tool   Dressing." 
Oberg,  Erik  Voldemar,   "Heat  Treatment  of  Steel." 

Woodworth,  Joseph  Vincent,  "Hardening,  Tempering,  Annealing  and  Forg- 
ing of   Steel." 

CORROSION 
Friend,   John   Albert   Newton,    "The   Corrosion   of    Iron    and    Steel." 
Sang,  Alfred,   "Corrosion  of  Iron   and   Steel." 

COSTS 
Carnegie,   David,   "Liquid    Steel,   Its   Manufacture   and   Cost." 

SPECIAL    STEELS 

(A)  Damask.  Abbott,  James,  "Journey  from  Heraut  to  Khiva,  Moscow, 
St.  Petersburg."  The  appendix  contains  a  translation  of  an  interesting  trea- 
tise upon  Damask  Steel. 

(B)  High  Speed.  Becker,  Otto  Mathew,  "High  Speed  Steel;  Development, 
Nature,  Treatment  and  Use." 

(C)  Alloys.  Hibbard,  Henry  Deming,  "Manufacture  and  Uses  of  Alloy 
Steels." 

Howe,  Henry  Marion,  "Iron,  Steel  and  Other  Alloys." 

Lake,  Edmund  Francis,  "Alloy  Steels." 

Smith,  Albert  William,   "Materials  of  Machines." 

(D)  Electric  Steel.  Lyon,  Dorsey  A.,  "Electric  Furnaces  for  Making  Iron 
and  Steel,"  U.  S.  Bureau  of  Mines,  Bulletin  67. 

Rowland,  Arthur  J.,  "Applied  Electricity  for  Practical  Men." 
Stansfield,  Alfred,  "Electric  Furnaces." 

(E)  Structural.  Campbell,  Harry  Huse,  "The  Manufacture  and  Properties 
of  Structural  Steel." 

SPECIAL    INVESTIGATIONS 

Becker,  Albert  John,  "The  Strength  and  Stiffness  of  Steel,"  University  of 
Illinois  Bulletin  No.  85,  1916. 

Brull,  A.,  "Comparison  of  the  Resisting  Qualities  of  Iron  and  Steel" — Trans- 
lated from   the   French. 

Parr,  Samuel  Wilson,  "The  Embrittling  Action  of  Sodium  Hydroxide  on 
Soft  Steel,"   University  of  Illinois  Bulletin   No.   94,   1917. 

Whittemore,  Hubert  Lucius,  "The  Strength  of  Oxyacetylene  Welds  in 
Steel,"   University  of   Illinois  Bulletin   No.  45. 

Lange,  Ernest  E.,  "An  Account  of  Some  Remarkable  Steel  Crystals." 

Scott,  Howard,  "Effect  of  Rate  of  Temperature  Change  on  the  Transforma- 
tion in  an  Alloy  Steel,"  Bureau  of  Standards  Scientific  Paper  No.  335.  See  also 
Paper  No.  396  for  "Thermal  and  Physical  Changes  in  Carbon  Steels." 

Seely,  Fred  B.,  "Relation  Between  Elastic  Strengths  of  Steel  in  Tension, 
Compression    and    Shear."      University    of    Illinois    Bulletin    No.    115. 

Van  Den  Brock,  John  A.,  "The  Effects  of  Cold  Working  on  the  Elastic 
Properties  of  Steel."     Ph.D.  Thesis,  University  of  Michigan,   1918. 


PROBLEMS  IN  STEEL  BUYING  221 

Cain,   John   R.,    "Determination   of   Carbon    in    Steel,"   Bureau    of    Standards, 
Technical  Papers  No.  33,  No.  69,  No.   141,  No.  350,   No.  346,  and  No.  126. 
Moore,  Earnest  Pierce,   "Loss  of  Carbon." 

AMERICAN    SOCIETY    FOR    TESTING    MATERIALS 

Standard    Specifications    for    Automobile,    Carbon,    Alloy    Steels,    and    Other 
Steels. 

No  buyer  of  iron  and  steel  products  can  afford  to  be  with- 
out at  least  a  working  knowledge  of  the  data  contained  in 
the  above  publications.  A  thorough  study  of  these  volumes 
amplified  by  current  reading  on  the  subject,  will  qualify  even 
the  inexperienced  purchasing  agent  to  buy  these  products  on 
a  more  scientific  basis. 


Chapter  XXVI 

MODERN   FOUNDRY   SUPPLIES' 

Moulding  Sand. — Moulding  sand,  the  medium  by  which  a 
casting  is  formed,  should  have  most  careful  consideration. 
On  it  depends  the  surface,  and  often  the  quality  of  the  cast- 
ing. Too  often  the  foundry  buyer  selects  moulding  sand  from 
a  nearby  pit  without  carefully  considering  the  quality.  This 
reduces  first  cost,  but  often  proves  expensive  in  the  long  run. 
The  source  of  supply  should  be  the  governing  feature,  rather 
than  the  location  of  the  foundry. 

Moulding  sand  is  made  up  of  particles  of  quartz  or  sand, 
and  a  bond  of  clayey  substance  forming  a  thin  coating  around 
each  grain  of  sand.  This  bond  determines  the  quality  al- 
most entirely,  and  should  be  carefully  studied  and  analyzed. 

It  is  the  bond  which  makes  a  casting  rough  or  smooth  as 
to  surface,  and  in  a  great  measure  affects  its  density.  Sands 
may  be  open  or  dense,  depending  on  the  percentage  of  the 
bonding  substance,  but  the  fusing  of  the  bond  will  upset  the 
calculations  of  the  moulder.  The  bond  usually  has  a  much 
lower  melting  point  than  the  particles  of  sand.  The  presence 
of  lime  and  other  impurities  is  most  objectionable.  Mould- 
ing sand,  therefore,  should  be  made  up  about  as  follows: 

Constituents  Percentages 

Silica    80  to  85 

Alumina    6  to  10 

Iron   oxide 3  to     5 

Lime    under  1 

Securing  Uniform  Quality. — Many  deposits  of  sand  con- 
tain gravel  and  small  balls  of  clay.  The  better  producers  are 
therefore  erecting  plants  at  the  pit  to  dry,  mill  and  screen  their 
deposit  as  mined,  in  order  to  insure  a  uniform  texture  with 
all  particles  of  stone  and  clay  crushed  and  thoroughly  mixed. 

It  is  possible  to  improve  sand  having  a  high  percentage  of 
bond  of  low  melting  average  by   adding  sharp   silica   sand, 

*  Prepared    by   J.    D.   Hiatt   of   the    National    Malleable    Castings    Company, 
Chicago. 

222 


MODERN  FOUNDRY  SUPPLIES  223 

which  is  free  from  any  bond.  This  produces  sand  having  more 
open  grain  structure. 

Moulding  sands  are  obtainable  in  most  parts  of  the  country, 
and  while  good  sands  may  be  found  in  any  one  territory,  the 
quality  of  the  bonding  property  seems  to  average  about  the 
same  in  each  locality.  New  Jersey  and  Ohio  are  good 
examples  of  localities  favoured  by  nature  in  the  refractory 
quality  of  the  bond  in  their  natural  sands.  The  presence 
of  many  foundries  in  those  territories  has  proved  a  great 
incentive  to  the  development  of  the  moulding  sand  industry. 

The  prime  requirement  in  the  purchase  of  moulding  sand 
is  to  watch  the  bonding  element,  and  as  far  as  possible,  to 
exclude  the  worthless  impurities  which  might  nullify  the  good 
to  be  obtained  from  the  silica  content. 

Coke. — Until  about  twenty-five  years  ago  coke,  as  known 
to  the  foundry,  was  produced  from  beehive  ovens,  and  only 
in  the  past  five  years  has  that  type  of  oven  been  displaced  in 
percentage  of  production  by  the  type  known  as  by-product. 
The  foundryman  may,  therefore,  choose  between  these  two 
grades — the  silvery  fingered  structure  of  the  beehive  coke, 
inheriting  many  of  the  impurities  contained  in  the  coal  from 
which  the  coke  was  produced;  and  the  black  spongy  appear- 
ing product  of  the  by-product  oven,  from  which  much  of  the 
objectionable  content  of  the  coal  has  been  eliminated.  Equally 
good  results  may  be  obtained  in  the  cupola  with  good  grades 
of  coke  made  by  either  process,  but  there  is  much  in  favour 
of  the  by-product  coke,  because  the  fracture  gives  a  uniform 
lump  of  possibly  four  or  six  Inches,  cubical  measure,  instead 
of  long  irregular  splinters  which  separate  Into  smaller  pieces 
of  the  same  shape  under  shock.  The  by-product  coke,  there- 
fore, makes  the  better  bed  in  the  cupola.  With  a  thick,  even 
bed  of  cubes,  which  do  not  pack  tightly,  separating  the 
charges,  good  melting  time  should  be  attained  and  the  cost  of 
the  fuel  may  be  figured  accordingly. 

Fire  Brick. — Cupola  practice. — In  the  selection  of  refrac- 
tories for  capola  lining,  it  is  necessary  to  bear  in  mind  the 
fact  that  there  are  two  distinct  zones  of  action  In  a  cupola; 
one  being  the  melting  zone,  the  other  the  abrasion  zone.  In 
the  upper  part  of  a  cupola  where  the  pig  iron,  scrap,  and  coke 
come  In  contact  with  the  fire  brick  there  Is  a  certain  amount 
of  heat,  but  Its  effect  on  fire  brick  is  negligible  as  compared 
with  the  abrasion  from  the  stock  as  it  moves  down  through  the 


224     PURCHASING  PRINCIPLES  AND  PRACTICES 

cupola.  Therefore,  in  selecting  a  fire  brick  for  the  top  por- 
tion of  a  cupola,  it  is  highly  advisable  to  secure  one  of 
reasonable  refractoriness,  but  chiefly  one  that  is  very  strong 
physically,  and  that  will  resist,  as  much  as  possible,  the  abra- 
sion of  this  stock.  The  best  brick  for  the  top  portion  of  a 
cupola  is  a  top  quality  blast  furnace  brick,  which  is  manufac- 
tured from  finely  ground  fire  clay,  containing  a  large  per- 
centage of  plastic  clay.    The  brick  must  be  burned  very  hard. 

In  the  lower  portion  of  the  cupola,  there  is,  of  course,  a 
certain  amount  of  abrasion  as  the  stock  in  a  semi-moulten 
state  moves  down  from  the  upper  portions  of  the  cupola,  but 
the  chief  requirement  of  the  fire  brick  is  its  ability  to  with- 
stand the  high  temperature  attained  in  the  melting  zone.  For 
this  purpose  it  is  desirable  to  use  a  brick  which  is  manufac- 
tured from  highly  refractory  clays,  containing  a  small  per- 
centage of  plastic  clays.  They  should  be  ground  fine  and 
burned  at  a  high  temperature  in  order  to  produce  a  good, 
strong   bond. 

Malleable  Furnace  Practice. — For  the  lining  of  the  side 
walls  and  bungs  of  a  malleable  furnace,  two  distinct  types  of 
brick  are  required.  A  successful  bung  brick  is  one  that  will 
withstand  extremely  high  temperatures,  and  resist  the  ten- 
dency to  spall  or  break  off  in  pieces  because  of  the  sudden 
changes  in  temperature  to  which  this  brick  is  subjected.  Such 
a  brick  should  be  coarse,  open-grained  in  structure,  and  of  a 
rather  light  burn.  It  has  been  found  in  the  majority  of  cases 
that  a  brick  of  such  a  structure  will  best  withstand  bung  con- 
ditions, providing  of  course,  it  has  the  proper  refractory  limit. 

In  the  side  walls  of  a  malleable  furnace,  conditions  are 
much  different  from  those  in  the  bungs ;  here  the  brick  has  to 
withstand  high  temperatures  as  well  as  the  chemical  action  of 
the  metal  and  the  erosive  effect  of  the  slag.  It  has,  therefore, 
been  found  advisable  to  use  a  brick  somewhat  denser  in  struc- 
ture, and  harder  in  burn  than  that  used  in  the  bungs.  The 
refractory  qualities  of  the  side-wall  brick  should,  however,  be 
as  high  as  possible. 


Chapter  XXVII 

CHICAGO  ELEVATED :  STORES  DEPARTMENT 

Organization. — The  Chicago  Elevated  Railroads  include 
four  railroads,  each  operating  as  a  separate  company,  and 
keeping  separate  accounts.  There  are  four  storerooms,  each 
in  charge  of  a  storekeeper,  and  three  storage  yards.  The 
stores  department  clerical  force  for  all  roads  is  located  in  the 
office  of  the  general  storekeeper.  The  general  organization 
plan  of  the  purchasing  and  stores  department  is  as  shown  on 
the  organization  chart. 

Duties. — It  is  the  duty  of  the  stores  department: 

1.  To  keep  on  hand  at  all  times  a  sufficient  supply  of 
materials  to  meet  the  requirements  of  the  various  depart- 
ments of  the  railroad,  to  receive  and  check  deliveries,  store 
and  safely  care  for,  account  for,  and  disburse  on  requisition 
only,  all  materials. 

2.  To  keep  the  stocks  of  various  materials  at  a  minimum  in 
order  to  keep  the  amount  of  the  investment  down,  and  to 
make  the  annual  turnover  as  large  as  is  consistent  with  safe 
and  economical  operation. 

3.  To  cooperate  to  the  fullest  extent  with  all  other  depart- 
ments and  give  maximum  service. 

4.  To  report  promptly  for  disposition  any  materials  which 
may  have  become  obsolete  because  of  change  of  standards, 
or  of  which  the  stock  is  too  large. 

Great  Variety  of  Materials. — It  must  be  remembered  that 
on  a  railroad  system  like  ours,  where  there  are  various  types 
of  motors,  electrical  equipment,  cars,  etc.,  for  w^hich  repair 
parts  must  be  available,  a  great  variety  of  materials  are 
required.  Most  of  these  parts  are  more  or  less  special,  and 
a  railroad  storekeeper  cannot  always  work  on  a  definite 
schedule,  as  might  the  storekeeper  in  a  manufacturing  con- 
cern, where  a  definite  manufacturing  program  is  outlined. 
Close  cooperation  between  the  stores  and  other  departments 
is  therefore  of  prime  importance. 

*  Written  by  E.   E.   Kretschmer,   Purchasing  Agent,   Chicago   Elevated   Rail- 
roads,  and  First  Vice-President,  Purchasing  Agents  Association,   Chicago. 

225 


226     PURCHASING  PRINCIPLES  AND  PRACTICES 

For  Record  Purposes. — Each  of  the  many  thousands  of 
items  used  is  given  what  we  call  a  "railroad  lot  number,"  in 
other  words,  what  might  be  called  our  own  "catalogue  num- 
ber." Each  item  of  material  is  assigned  to  a  certain 
"CLASS"  of  material.  The  various  "classes"  of  materials 
are  shown  on  Form  JB-206A.  In  classes  125  to  133  inclusive, 
which  are  all  roadway  materials,  each  class  has  its  own  series 
of  "railroad  lot  numbers."  For  example.  Class  125  is  as- 
signed R.  R.  Lot  No.  1  to  25.  Class  126  would  have  R.  R. 
Lot  No.  26  to  some  other  figure,  and  so  on,  depending  upon 
the  number  of  items  in  each  class.  Classes  134  to  158  in- 
clusive, which  include  a  great  many  small  items,  are  each 
assigned  lot  numbers,   beginning  with   one    (1). 

We  here  prefix  the  number  with  a  letter.  Letter  "A" 
would  designate  Class  134,  "B"  Class  135,  "C"  Class  136 
and  so  on.  In  other  words,  our  lot  number  Al  would  classify 
the  material  as  being  in  Class  134,  Lot  No.  1.  In  Classes 
125  to  133  the  lot  number  itself  designates  the  class  of  the 
material.  In  the  remaining  classes,  the  letter  prefix  classifies 
the  material.  It  is  necessary  in  Classes  134  to  158  to  begin 
with  No.  1,  otherwise  the  railroad  lot  numbers  would  run  into 
four  and  five  figures,  and  it  would  be  difficult  to  maintain 
a  properly  divided  series  of  numbers. 

Convenience  in  Receiving. — The  larger  items  of  material 
are  received  and  unloaded  and  stored  in  our  storage  yards, 
which  are  convenient  to  steam  railroad  connections.  All 
other  items  are  in  the  storehouse  or  storehouse  yard,  which 
is  adjacent  to  the  repair  shop  of  the  individual  road. 

In  the  storeroom,  all  materials  belonging  to  a  certain  class 
are  stored  in  the  same  series  of  shelving.  Each  compartment 
of  this  shelving  is  carded  or  tagged,  showing  lot  number  and 
description  of  the  material.  The  compartments  are  numbered 
consecutively,  as  far  as  possible. 

To  follow  the  system  through,  it  will  be  necessary  to  make 
use  of  various  printed  forms.  We  will  take  an  item  of  mater- 
ial and  follow  through  the  routine  from  the  time  the  store- 
keeper orders  it  to  the  receipt,  storage  and  accounting  in  the 
stores  department.  We  will  then  disburse  some  of  the  same 
material  from  the  storeroom,  and  follow  through  the  ac- 
counting until  it  is  charged  to  some  operating  or  some  other 
account  and  credited  to  the  storekeeper's  account.  All  mate- 
rials received  are  charged  to  the  storekeeper's  account,  and 


CHICAGO  ELEVATED:  STORES  DEFT.       227 

are  held  there  until  disbursed  for  use  to  some  other  account. 

We  will  take  for  example  an  item  of  W.  H.  109  Motor 
Axle  Bearing,  Pattern  4393,  which  will  be  followed  through 
the  system. 

Storekeeper's  order. — Form  J-31. — This  form  is  made  up 
by  the  storekeeper  in  triplicate,  all  copies  being  forwarded 
to  the  general  storekeeper's  office,  where  the  storekeeper's 
requisition  number  is  assigned,  and  quantities  are  checked 
against  past  consumption,  as  shown  on  Ledger  Sheet,  Form 
JB-380.  If  correct,  it  is  approved  by  the  general  storekeeper, 
the  original  copy  being  forwarded  to  the  purchasing  depart- 
ment, the  duplicate  retained  by  the  general  storekeeper,  and 
the    triplicate    returned    to    the    storekeeper. 

This  form  is  also  used  by  the  operating  departments  in 
ordering  special  materials.  They  then  make  an  extra  copy 
for  their  own  files,  and  assign  their  own  department  number 
for  record.  After  the  storekeeper's  requisition  (Form  J-31) 
has  gone  through  the  routine,  the  purchasing  department's 
purchasing  order  is  placed,  a  copy  of  this  purchasing  order 
being  forwarded  to  the  general  storekeeper  and  to  the  store- 
keeper of  the  road  concerned. 

These  copies  of  orders  are  filed  in  the  stores  department 
alphabetically  until  the  completion  of  order,  when  they  are 
filed  numerically  in  binders  for  future  reference.  The  store- 
keepers record  the  purchase  order  number  on  their  copies  of 
Form  J-31. 

Form  JB-358. — This  card  is  kept  in  the  storekeeper's  file. 
He  makes  a  record  on  this  card  each  time  he  places  an  order 
for  this  particular  material.  This  card  is  also  a  guide  to  the 
demand  for  this  particular  item  of  material,  and  the  ap- 
proximate quantities  to  order. 

Receipt  of  Materials.  —  Receiving  Memo.  —  Form  J-341 
{numbered  in  duplicate) . — After  a  shipment  is  checked,  this 
form  is  made  out  by  the  storekeeper.  The  original  copy  is 
sent  to  the  general  storekeeper's  office,  the  duplicate  is  re- 
tained by  the  storekeeper,  and  filed  numerically.  The  store- 
keeper also  makes  a  record  of  the  receiving  memo  number  on 
his  copy  of  the  purchase  order. 

All  invoices  are  sent  direct  to  the  general  storekeeper's  of- 
fice in  duplicate.  The  original  receiving  memo  is  filed  al- 
phabetically in  the  general  storekeeper's  office  until  the  invoice 
is  received.     The  invoice  is  then  checked  with  the  receiving 


228     PURCHASING  PRINCIPLES  AND  PRACTICES 

memo  for  quantities  and  description,  and  If  correct,  is  certi- 
fied on  the  face  of  the  Invoice  as  shown.  The  original  invoice 
is  finally  forwarded  to  the  purchasing  department  for  price 
checking,  approval  for  payment,  and  forwarding  to  the 
auditor  as  authority  to  charge  the  storekeeper's  account,  and 
vouchered  for  payment.  The  duplicate  copy  Is  retained  In  the 
general  storekeeper's  office  for  entry  in  the  stock  ledger  (Form 
JB-380),  and  then  filed  numerically. 

The  receiving  memo  number  and  date  is  also  recorded  on  the 
general  storekeeper's  copy  of  the  purchase  order,  and  then 
both  purchase  order  and  receiving  memo  are  filed  numerically. 

Receipt  of  Material. — Form  75-384. — Notice  from  store- 
keeper to  operating  department.  This  form  Is  used  only  where 
special  materials  are  ordered  by  other  departments  and  as 
general  information  for  those  departments  when  this  material 
Is  promised  for  shipment,  shipped,  or  received. 

Report  of  Material. — Form  JB-\\\. — This  form  is  used 
In  place  of  the  receiving  memo  (Form  J-341),  when  car  lot 
shipments  are  received  at  the  storage  yards.  All  material 
received  in  the  storage  yards  Is  unloaded  by  the  maintenance 
of  way  department.  This  form  Is  also  used  when  material  is 
loaded  in  the  storage  yard  for  out-shipment. 

Ledger  Sheet. — Form  JB-3S0. — These  sheets  are  kept  in 
the  general  storekeeper's  office,  filed  numerically  in  binders. 
The  lot  numbers  serve  as  the  ledger  page  numbers.  On  this 
sheet  Is  recorded  the  general  description  of  the  material, 
weight,  manufacturer's  catalogue  number  if  any,  pattern 
number,  the  unit,  the  minimum  stock  and  the  maximum  stock. 
This  sheet  also  shows  when  the  material  was  ordered,  received, 
and  disbursed,  and  the  stock  on  hand.  The  work  is  all  done 
on  a  bookkeeping  machine. 

We  have  now  been  through  the  system  of  ordering  material 
for  stock,  and  accounting  for  it  until  it  is  charged  to  the  store- 
keeper's account.  We  shall  now  disburse  nine  pairs  of  W.  H. 
109  Axle  Bearings,  and  follow  through  the  system  until 
the  storekeeper's  account  is  again  credited  with  the  value  of 
the  material  disbursed. 

Requisition  on  Stores  Department. — Form  7-207. — This 
Is  the  form  of  requisition  used  by  other  departments  for  draw- 
ing material  from  the  stores  department.  The  form  is  filled 
out  in  triplicate;  the  third  copy  is  retained  by  the  department 
requiring  the  'material.     The  department  assigns  Its  own  de- 


CHICAGO  ELEVATED:  STORES  DEPT.       229 

partment  letter  and  number,  a  different  letter  being  used  by 
each  of  the  departments.  The  letter  and  number  designate 
whether  It  Is  for  the  shop,  road,  or  electrical  departments. 

The  original  and  duplicate  requisitions  are  presented  to  the 
storekeeper,  who  fills  the  order  and  Inserts  the  lot  number,  as 
shown  on  the  bin  from  which  the  material  Is  drawn.  The  store- 
keeper then  sends  both  copies  to  the  general  storekeeper's  of- 
fice, where  they  are  entered  on  stock  ledger  sheet  (Form 
JB-380),  under  the  heading  "disbursed." 

They  are  then  priced,  extended,  checked,  and  entered  on 
the  summary  distribution  (Form  JB-138).  The  original  Is 
filed  numerically,  the  duplicate  (also  priced)  being  attached 
to  a  duplicate  copy  of  Form  JB-138.  This  duplicate  copy 
of  JB-138,  with  duplicate  copies  of  requisition  attached, 
is  forwarded  monthly  to  the  department  head  controlling 
the  account.  This  gives  him  In  detail  all  materials  charged  to 
any  one  of  his  individual   accounts  during  the  month. 

Summary  of  Distribution. — Form  75-138. — This  sheet  is 
made  up  In  duplicate  In  the  general  storekeeper's  office,  a  set 
being  made  up  for  each  account,  showing  the  totals  of  each 
requisition  charged  to  that  account  during  the  month.  The 
original  copy  is  filed  In  the  general  storekeeper's  office;  the 
duplicate  goes  to  the  department  head  responsible  for  the  ac- 
count. From  this  form,  it  is  possible  to  locate  by  number  all 
requisitions  chargeable  to  any  individual  account  during  any 
month. 

Monthly  Distribution. — Form  75-241. — This  form  con- 
sists of  five  sheets  showing  the  various  accounts.  (See  page 
238.)  This  is  made  up  in  the  general  storekeeper's  office,  and 
Is  a  complete  summary  of  the  totals  as  shown  on  Form  JB-138 
for  each  account.  The  original  Is  forwarded  to  the  auditor 
who  credits  the  total  amounts  shown  to  the  storekeeper's  ac- 
count, charging  the  various  operating  accounts,  plus  a  per- 
centage to  cover  the  storehouse  expense. 

Monthly  Stores  Department  Ledger  Report. — Form 
JB-206A. — This  report  is  made  up  in  the  general  store- 
keeper's office,  and  Is  a  monthly  recapitulation  of  the  ledger 
class  control  sheets.  For  the  ledger  class  control  sheets,  a 
copy  of  Form  JB-380  Is  used,  on  which  Is  recorded  daily  in 
money  value  only  the  debits  and  credits  for  the  class  of 
material.  This  information  is  transferred  to  Form  JB-206A 
at  the  end  of  the  month. 


230     PURCHASING  PRINCIPLES  AND  PRACTICES 

The  report  is  valuable  because  It  analyzes  the  amount  of 
funds  tied  up  in  each  class  of  material,  and  also  shows  the 
monthly  turnover  in  the  various  classes.  This  report  also 
must  agree  with  the  auditor's  report  of  total  debits  and 
credits  to  the  storekeeper's  account. 

The  purchasing  department  compiles  a  report  showing 
the  various  classes  of  materials  and  the  money  value  of  each 
of  the  classes  on  the  first  of  each  month.  This  shows  a 
monthly  comparison  all  on  one  sheet,  that  is,  a  report  cover- 
ing a  whole  year  would  have  twelve  columns,  and  a  com- 
parison can  be  made  month  against  month  on  any  class. 

Return  Goods  Notice. — Form  75-90. — This  is  made  out 
in  the  general  storekeeper's  office  In  triplicate,  and  covers 
the  material  returned  to  vendors  for  any  reason.  It  serves 
both  as  a  shipping  notice  and  a  request  for  credit.  A  copy 
of  this  notice  Is  also  forwarded  to  the  purchasing  department 
for  their  information.  This  return  goods  notice,  and  the 
credit  memo  are  numbered,  and  recorded  on  the  receiving 
memo  when  the  credit  memo  is  received. 

Receipt  of  Car  Notices. — Form  75-348. — The  yard  man 
forwards  this  form  to  the  general  storekeeper.  A  copy  also 
goes  to  the  maintenance  of  way  department  as  notice  to 
unload. 

Form  7-179. — This  form  is  used  when  any  materials  are 
returned  by  departments  to  the  storehouse,  cither  new  or 
scrap  material.  It  Is  made  In  triplicate  by  the  storekeeper, 
one  copy  going  to  the  general  storekeeper,  one  copy  to  the 
department  returning  the  material,  and  one  copy  being  re- 
tained by  the  storekeeper.  This  is  notice  to  the  general 
storekeeper  that  the  storekeeper  has  received  material  which 
should  be  credited  to  some  other  department  account,  and 
charged  to  the  storekeeper's  account. 

Form  7-180. — This  Is  made  In  triplicate  by  the  general 
storekeeper  on  receipt  of  Form  J-179.  It  gives  a  com- 
plete record  of  material  taken  Into  the  storekeeper's  ac- 
count, and  a  copy  of  the  form  Is  sent  to  the  auditor  as  au- 
thority to  credit  one  account,  and  charge  the  storekeeper's 
account.  One  copy  Is  retained,  and  the  other  copy  is  for- 
warded as  a  credit  memorandum  to  the  department  whose 
account  Is  credited. 

Check  Inventory  Sheet.' — Form  75-342. — The  stock 
ledger  Is  a  perpetual  inventory  record,   but  test  inventories 


CHICAGO  ELEVATED:  STORES  DEPT.       231 

are  taken,  a  few  items  at  a  time,  continuously,  to  check  the 
actual  material  balance  in  the  storehouse  against  the  stock 
ledger  balance. 

The  purchasing  department,  in  placing  orders,  shows  the 
R.  R.  Lot  Number  for  each  item,  and  requests  the  vendors  to 
show  the  lot  number  of  each  item  on  their  invoice.  It  is  then 
an  easy  matter  when  the  ledger  clerk  receives  the  invoice,  to 
turn  over  to  the  page  number  in  the  ledger,  which  is  also  the 
lot  number,  and  make  the  necessary  entries. 

Scrap  Material. — All  scrap  materials  are  turned  over  to 
the  stores  department  for  credit  to  a  proper  account  when 
sold.  All  sales  of  scrap  are  made  by  the  purchasing  de- 
partment, each  sale  being  given  a  scrap  sale  number.  The 
general  storekeeper  receives  from  the  purchasing  department 
a  notice  of  the  sale  of  scrap  to  a  dealer.  The  material  is  de- 
livered to  the  dealer  in  accordance  with  the  terms  of  the 
sale.  The  storekeeper,  with  the  travelling  storekeeper,  weighs 
all  scrap  as  it  Is  delivered  to  the  buyer.  A  receipt  Is  obtained 
whenever  scrap  Is  delivered.  Form  JB-73  is  then  filled  out, 
and  sent  to  the  purchasing  department  as  a  record  of  the 
material  delivered  on  the  sale,  and  the  proper  accounts  are 
duly  credited.  The  sale  of  scrap  is  then  formally  closed  In 
the  purchasing  department  by  the  Issuing  of  a  scrap  sale  re- 
port giving  a  complete  record  of  all  materials  sold  under 
that  sale  number.  A  copy  Is  forwarded  to  all  officers 
interested. 

Travelling  Storekeeper. — On  our  roads,  one  of  the  duties 
of  the  travelling  storekeeper  is  to  keep  in  actual  touch  at  all 
times  with  the  stocks  in  the  various  storehouses  and  yards, 
and  to  keep  In  touch  with  the  work  being  done  by  other  de- 
partments. If  one  road  Is  overstocked  on  a  certain  Item  of 
material,  or  if  they  have  in  stock  materials  which  might  not 
move  promptly,  and  one  of  the  other  roads  might  at  the 
same  time  need  some  of  this  same  material,  he  transfers  the 
material  from  one  stock  to  another.  In  that  way  he  helps 
to  keep  down  the  combined  stock  of  the  four  roads. 


232     PURCHASING  PRINCIPLES  AND  PRACTICES 


CHICAGO  ELEVATED:  STORES  DEPT.       233 


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234     PURCHASING  PRINCIPLES  AND  PRACTICES 


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aUiMTITY 

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1/15/21      2536 

M-«6l67 

10/10/2X 

FonD<.B.a68.   SOM.    1-20. 


FORM   J    B-35S 


CHICAGO  ELEVATED:  STORES  DEPT.        235 


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236     PURCHASING  PRINCIPLES  AND  PRACTICES 

fh>  Metropolitan  We»t  Sld»  El«v*t>d  R*11w*t Company 

Date Pot.  9th,   1921. 

M.    --.   Shop  D»pt. 

^^ Items    . 


Ordered  on  your  purchase  requisition  No, bS5~R Dated 9/5/21 


^njped-  J.  On  10/8/21  From Via_ 

Received 

Remarks  _____ 


R.  HOUSE,  Asst.  GenI  Storekeeper. 
Per 


FORM    J    B-384 


refra  J  Bin     3U-3b     11  30 


REPORT  OF  MATERIAL 


TO  ENGINEER. 

MaiNTENANCE  OF  WAY: 


I  HAVE  TODAY LOADED  AT- 


-THE  FOLLOWINQ  MATERIAL'. 


CAR  NUMBER CONTENTS- 


MATERIAL  CHECKED  AS  FOLLOWS: 


LOADED  BY- 


CONTENTS  INSPECTED  BY  , 


FORM    J     B-111 


CHICAGO  ELEVATED:  STORES  DEPT.        237 


TZt   KXTBOfOI-ITAH  TtBT   flTCT  r'tVATIB   BlILWT   CCWWT 
STOREKEEPER  S  RECORD  Oh   f<ECEIPTS  ANO  DISBURSEMENTS 


CA'ALOC  NO                  ^. 

►ATTiRN  NO  JWi romul*:         K^I"** 

nFM:Ri«inu    »•  H.   lOJ  HIE  KiM»69     -                            »«*«4 

L-^-'Ti""- •---.- •,:.-.^  rr'" ...:.    .„.,  .„.,.,r"r" ,  „~r' '." 

ns/iysa    Blow  2500  -25     fc7.27-tV31.75 -•, 

7/1  /21                                                                           S-W75    *          »17.27      »  M.« 

«/i5/a                                                           8-uaoo  6            •   ,      10J.62 

5/15/21                                                                                8-H922     9                •            155- tJ 
iOAO/a  8S167       •675          25          '          '•Sl.TS                                          ' 

-:::j?z:\^~ 

25      117.27  '   »ftjl.?5 

!^  !  :  i  ty% 

6       ;      •       '      IOJ.62 
Jl           •          536. 3T 

IfamimUMug 


FORM    J     B-380 

Tbs  Metropolitan  West  Side  Elevated  Railora;  Cs. 


REQUISITION  ON  STORE  DEPARTMENT  kyt  fci   ft-^Zg 

Date        8«Pt.    I5th,  iq?  1 

Where  used       Throop  StTAftt  a^aaa 

For  what  purpose Kotor  B»«.r<r.go 


»«"«r 

MATERIAL 

VJ=iSJ? 

(VUHSCII 

OiMamrr 

pmci 

AWOUNT 

9  Pr. 

V.B.  IC9  Axl«  Bo&jflQ^ 

Pattern  *393 

44 

P-2«5 

9 

17 

27 

155 

%3 

ExIendeO  by_ 
Received  by_ 


Checked  by_ 


.Filled  by_ 


00  NOT  ORDER  MORE  MATTRIAi.  THAN  IS 
ATTUAUY  REQUIRED 


ftl%3%.  IM   «M   t.11 


Approved:. 

FORM   J-207 


Hxdef  Dwmmnt 


MONTH  or gggt«M^gj  agZl Accoy NT_J!yL 


FORM   J   B-138 


238     PURCHASING  PRINCIPLES  AND  PRACTICES 


MATERIAL  DiSTRIBUTIOM 
COMPANY 

MONTH  or 19 


MATCniAL 


.■AlirtUKI  Of  KAT-eoUD 

I  Dsllut 
6  TIM 

«  Ralla 

1  Ball  FMt«nlori  And  JoloU 

6  Fro^.  SwIicbM  sod  SpacUl  Work 

9  Guard  TUils  kJDd  Timber* 

10  Cable  DoiM  and  Footwalks 

II  BlfTOkl  tuid  [DierlooklDg  S/iUima 

12  Removal  of  Baow  uk]  Ice 

13  Oibcr  Ro3d«a>  EUpeuea 
Special 


■<I«TCUKU  OF  WtT-ClCCniCIl 

4  CoDduclor  RallB 

6  Overhead  Trolle/ 
(1    feeder  Sytiem 

7  Relurn  Clrculi  Sjsteni 

5  Telepbooe  aod  Telegraph 

9    Qiber  DialiibutloD  ElxpeoEe* 
Special 


20  PouodatlODS 

21  Repain  of  Structure 

22  PalotUig8tructur« 

23  Other  Structure  Czpeoi 
SpscUl 


24    Patlog  and  Cloanlug 
24    CroaalDga,  Feocea,  9lpja,ew. 
28    Ugbtlog  Hlirhwar  aod  Varda 
Zl    Other  Rtgbt  of  Waj  Expentee 
SpMlal 

lUiLSiicx  raiuau  aao  Atouwt 

2ft     SUtloQ  BulIdlDft 

30  Storage  Batter;  BulIdlDgs 

/3l  Hour;  Station  BiiUdlDg* 

32  Uaebtoe  and  Repair  Shopa 

33  Other  Qutldlo^ 

H    Water  Sy»t«m  U)  Yard* 
33    EJectrlc^l  Utloteoaoce  of  BuUdlogt 
3B    Other  Expeoaoa 
fifMolal 


TotAl  MalnL  W.  B-  *  a 


Caaaigp  Fohw* 


•TOntMOUII 


FORM    J    B-241 


CHICAGO  ELEVATED:  STORES  DEPT.        239 


ttmt  I  MU.  IK.  tM 


tm  vmrffM.i^Ln  trtet  atui  riTttm  nr,    rrtu^i^fTw 


STORE  OCPARTMCNT  LCOGCR  HCPORT  FOR  m6nTH  OF IVSHBt. 


loal. 


ClUI  RUIiEII  MO  OCICRirilON 

o.n.»^Jt^ 

■ccinto          1         oiHunn 

eiinn          |  MtuMt_AxtM 

lATIm 

15.570.85 

3.867.69 

3.697.'*9 

IS.T'H.C? 

Ul.  Rati 

aSk.  lUll  (Second  Buod) 

177.  lUU  FuUDlDgv  »d  Jotou 

la.  rrejt,  SwlKbci  ud  SpocUl  Work 

120.  Guard  lUili  ud  TlmlMrt 

190.  SIffDAl  Supplies 

Ul.  Footwftib,  Platform  ud  Mlac.  Loab*. 

112.  Builoo  Suppllea 

IM.  MiK.  MaloKUDM  of  Waj  Material 

Toul  Value  Malot.  ot  Wa;  Material 

IM.  Clasa,  PaloU,  Palolera' Suppllea 

lU.  Ill  liUi  bml.  wMal  C<qnui  ul  (••»«■ 

IW.  loiulatloK  Material!  aod  PaloU 

1J7.  CarboDB 

U8.  hia.  rnun.  Ui,  tmli.  lum,  frkn 

|]«   Cu  l<l<r  tj<f«l,  ii>Mii{  Cu  btbhn  id  fi;tl»>      ! 

138a.  Control  Apparatus  Bepalr  Parte            | 

140.  UlenllaiieouaCarMatorUI                      | 

141.  Lit  Hme.  Patkioj,  GaekfB,  Rubber  Suppli«   | 

142.  Portere'  Suppllea 

14).  CKira  Uifi,  UiUni,  brim,  Uai  Iifin 

144.  Electrical  Suppllee 

148.  Dnigi  aod  Cbelslcslt 

147.  Lljbt  and  Hea»j  Bard»are 

146.  Drj  Good!  aod  Cordage 

"«•  Xsi-rY-tXiS:  ""*""""""" 

IM.  Pipe  and  Pipe  Fltllnji 

1(1.  M  ul  Ira  Mull.  Ini,  IM.  Tal  llul 

1S2.  Oil,  Waale,  Creaeea 

143.  Tlr«i,  Wbeela.  Axlea.  Geari,  PInlona 

iM.  epecUl  Material 

IS^  Mlac.  Supplies  (common  to  all  depte  ) 

IM.  Inki,  Tnl  Ml  tas  lo  l^fb.  i»Mi(  t<il>  n« 

Ul.  Wire  >ll  kloda 

lU.  Cartoja,  Beela  and  Cement  Sack! 

TM«) 

A.  KB. 

Crurt  Total 

FORM,  J    B-206    A 


240    PURCHASING  PRINCIPLES  AND  PRACTICES 


ij. »»  ta.  Ml 


4M  SouUi  Tbroop  Si'wl 
CHICACO 


On- 


_we  Klurnrd  vi«_ 


_to  your  CompaBy 


Jot  credit. the  (ollowmg  items: 


Relumed  account  of_ 


Please  send  aedit  memorandum  in  duplicate  to  General  Storekeeper,  414  SoulK  Thioop  Street,  at  your 
earliest  convenience. 


FORM    J    B-90 


CcnerkJ  Storekeeper. 


VtavJ.«.«4«.    la-M.   Ml 


ROAD. 


IMe. 


m.  p.  p.  Kccixt, 

OcnenU  Storekeeper. 
DeaxBin 

The  foUowlnf  c«r  iru  received  at. 

Ccrlaitlal 


.TmriUOiflate. 


WBIOBT8:    OSOSS. 

CoBteaU  _^_____ 


.TABS- 


.HBr_ 


GoBdhloa  of  Scato. 


Coadttion  of  Car. 


FORM    J    B-348 


CHICAGO  ELEVATED:  STORES  DEPT.       241 


VBB  KBISOPOLITAN  WS2T  8ID3  BZ,BTATBD  KAUWAT  COICPART. 

To  CEKOUl  STcmtxEErEa  ■  Nix 

The  foilc'oi&s  Mataful  has  bean  R£TUnNED  this  <I>ta. 


FORM    J-179 


runr.;.  IS}.    850»»!»iiiTt19S».    HI. 

THK  MBTaoPOlITAN  WEST  SEDB  EI,BVAT35D  KAIfSTAT  COMPANY. 

8tOT»lregpor*«  Credit   Momorandana  {i>-    >)«)»> G 


«JAnTlTT 

i>iftcni^Ti<;n 

sMcon 

•*C*rf 

rnrct 

vav* 

AUM-Vr 

- 

O«A0)C3 

flET 

UttHBDftT 

, 

■-  , 





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FORM    J-180 


242     PURCHASING  PRINCIPLES  AND  PRACTICES 


FORM  J  B-342 


Form  J   B  73     IH.    9J» 


SCRAP  DELIVERY  TICKET 

Date_ 


The  following  items  of  scrap  material  have  been  delivered  to 


Wagon  Load  No.. 


Total  Weight. 


FORM    J    B-73 


Chapter  XXVIII 

SALVAGE  NOW  A  SCIENCE* 

The  Importance  of  Salvage. — To  the  average  purchasing 
agent  there  may  not  seem  to  be  any  necessity  for  devoting 
much  time  and  study  to  the  handling  and  disposal  of  salvage 
and  scrap  materials.  In  the  war  years,  and  those  that  im- 
mediately followed,  there  was  a  well  organized  propaganda 
for  the  conservation  of  materials  of  all  kinds.  Materials  of 
every  description  became  so  scarce  that,  even  with  the  great- 
est economy,  some  plants  were  not  able  to  secure  all  they 
needed.  After  the  necessity  for  this  strict  rationing  of  ma- 
terials had  passed,  many  of  the  larger  plants  found  that 
they  had  set  up  an  organization  for  the  handling  and  the 
economical  salvaging  of  materials  that  had  resulted  in  huge 
economies. 

The  amount  of  money  that  may  be  saved  by  the  scientific 
handling  and  disposal  of  by-products,  and  salvage  and  scrap 
materials,  may  be  partially  realized  when  you  learn  that  the 
introduction  of  the  scientific  handling  of  this  material  resulted 
in  savings  totalling  more  than  $80,000,  in  a  single  automobile 
plant  in  Detroit  in  1921. 

Food  for  Thought. — It  is  quite  possible  that  all  of  these 
scrap  materials  produced  by  your  particular  plant  are  handled 
in  the  most  economical  manner,  and  disposed  of  to  the  best 
possible  advantage.  It  would,  however,  be  rather  surpris- 
ing if  you  did  not  at  least  find  food  for  thought  in  the  fol- 
lowing discussion  of  this  important  part  of  the  duties  of  the 
purchasing  agent,  which  was  prepared  by  Earle  A.  Mann,  a 
former  assistant  purchasing  agent  with  the  Steel  and  Tube 
Co.  of  America,  later  with  the  General  Motors  Corporation, 
and  now  engaged  in  the  handling  of  industrial  by-products. 

Some  of  the  economies  effected  by  Mr.  Mann  are  most 
unusual.     Unfortunately,  it  is  not  possible  to  give  the  reader 

^Prepared  by  E.  A.  Mann,  Industrial  Engineer,  formerly  in  salvage  divi- 
sion, General  Motors  Corporation. 

243 


244     PURCHASING  PRINCIPLES  AND  PRACTICES 

the  details  of  the  cases  involved,  because  this  is  confidential 
data.  The  savings  effected  for  one  large  interest  totalled 
nearly  a  quarter  of  a  million  dollars  in  the  first  two  years. 

Read  the  chapter  on  this  most  interesting  subject,  and 
then  go  back  to  your  desk,  and  see  if  you  can't  study  out  a 
new  and  improved  method  of  handling  some  of  this  material 
that  will  result  In  a  saving  of  at  least  a  few  hundred  dollars 
each  year.  If  you  cannot  do  this,  either  your  plant  is  one  in 
a  thousand,  or  you  lack  the  vision  to  see  the  opportunities 
that  lie  at  your   feet. 

Salvaged  Material. — In  taking  up  the  question  of  sal- 
vaged material,  we  will  start  with  what  might  be  termed  the 
by-product  division  of  the  purchasing  department.  The  word 
by-product  Is  used  In  order  to  distinguish  this  class  of  mate- 
rial from  the  primary  product  which  the  company  manufac- 
tures. In  other  words,  a  manufacturing  company  makes  two 
classes  of  material:  First,  their  primary  product,  or  that 
material  which  they  are  Incorporated  to  manufacture;  sec- 
ond, that  material  which  Is  left  after  the  primary  product 
Is  manufactured,  and  which  Is  commonly  known  as  scrap,  al- 
though, In  order  to  operate  economically  and  efliciently,  the 
material  should  be  known  as  by-product  material,  and  taken 
through  the  stage  of  salvaging  or  reclamation  before  It  gets 
to  the  stage  of  scrap. 

In  common  usage,  the  words  salvage  and  reclamation  are 
synonymous.     In  reality,  there  Is  a  very  distinct  difference. 

Salvage. — Salvaged  material  Is  that  material  which  Is 
thrown  out  of  the  line  of  production  by  the  Inspectors  because 
of  some  minor  defect,  which  material  can  possibly  be  re- 
paired and  put  back  into  the  line  of  production,  or  used  In 
some  other  way  by  the  company.  An  example  of  this  would 
be  the  cylinder  head  In  an  automobile  plant.  In  which  one  of 
the  holes  might  be  drilled  one-sixty-fourth  of  an  Inch  off  cen- 
ter, which,  so  far  as  the  production  department  is  concerned, 
would  be  sufficient  to  throw  the  cylinder  head  out  of  the  line  of 
production.  However,  this  hole  can  be  welded  shut  and  an- 
other hole  drilled  In  the  proper  location,  thereby  enabling 
the  cylinder  head  to  be  put  back  into  production  Instead  of 
being  scrapped.  This  would  be  termed  the  salvaging  of 
material. 

Reclaimed  Material. — Reclaimed  material  is  that  which, 
from  the  viewpoint  of  the  production  department,   is  scrap, 


SALVAGE  NOW  A  SCIENCE  245 

but  which,  from  the  view  point  of  the  by-product  division, 
can  be  used  by  someone  else;  either  as  is,  or  converted  into 
something  which  someone  else  can  use.  An  example  of  this 
might  be  the  small  pieces  of  leather  which  accumulate  in  a 
furniture  factory  or  an  automobile  trim  shop  plant  and  which 
from  the  point  of  view  of  that  plant  are  too  small  to  be  used 
further  by  them.  They  are  therefore  thrown  out  of  produc- 
tion, and  considered  as  scrap  by  the  production  department. 

However,  most  of  this  material  can  be  reclaimed,  and  sold 
to  novelty  manufacturers,  where  it  is  used  for  such  things  as 
children's  pocketbooks,  saddles  for  toy  horses,  collars  for 
toy  dogs  and  the  like.  This  would  be  termed  reclaiming 
material. 

Actual  Scrap. — The  third  class  of  work  to  be  handled  by 
the  by-product  division,  is  that  material  which  is  actually 
scrap.  Scrap  material  is  that  which  cannot  be  used  by  any- 
one unless  it  is  first  put  through  a  process  of  disintegration. 
For  example :  a  piece  of  iron,  steel  or  metal,  must  go 
through  the   process  of  remelting  or  refining. 

In  determining  whether  material  is  scrap,  there  are  four 
questions  you  should  ask  yourself:  (1)  Can  the  material  be 
used  "as  Is"  by  any  department  of  your  own  plant  or  your  allied 
companies?  (2)  Can  the  material  be  used  "as  is"  by  any  one 
else?  (3)  Can  the  material  be  re-worked  into  something 
which  can  be  used  In  some  department  of  your  own  plant  or 
your  allied  companies?  (4)  Can  the  material  be  re-worked 
into  something  which  can  be  used  by  someone  else? 

If  It  cannot  be  used  "as  Is,"  or  re-worked  into  something 
which  can  be  used,  then  It  is  scrap. 

Not  Scrap  but  By-Products. — So  far  as  your  scrap  fore- 
man and  workmen  are  concerned,  it  is  an  excellent  Idea  to  dis- 
continue the  use  of  the  word  "scrap"  as  far  as  possible,  be- 
cause to  the  average  mind  the  word  "scrap"  means  something 
of  no  value,  or  In  other  words  "junk,"  and  something  to  be 
got  rid  of. 

If  you  can  instill  Into  the  minds  of  your  foreman  and  work- 
men the  fact  that  everything  has  some  value  and  get  them  to 
think  of  this  material  as  a  by-product  instead  of  scrap,  you 
will  have  got  a  good  start  along  the  road  towards  saving 
money  for  your  company. 

Now  let  us  take  up  the  three  classes  of  material  handled  by 
the  by-product  division;  namely,  salvaged  material,  reclaimed 


246     PURCHASING  PRINCIPLES  AND  PRACTICES 

material,  and  scrap,  and  determine  how  these  three  classes  of 
work  can  best  be  handled. 

Salvaged  Material. — Rightfully,  the  salvaging  of  material, 
as  designated  above,  should  be  done  under  the  direction  of  a 
production  department  of  your  plant.  The  reason  for  this  is 
that  the  production  department  is  the  place  where  the  mater- 
ial is  spoiled.  They  should,  therefore,  have  the  opportunity 
to  salvage  that  material,  and  get  it  back  into  the  line  of  pro- 
duction, where  it  can  be  used  in  their  own  work,  thereby  get- 
ting credit  for  it,  instead  of  having  it  charged  against  them. 
If  this  material  were  turned  over  to  the  by-product  division, 
salvaged  by  them,  and  then  turned  back  into  production,  the 
entire  loss  would  be  carried  against  production  and  credited 
to  by-products. 

If  your  plant  is  too  small  to  maintain  the  salvage  depart- 
ment under  the  production  department,  it  is  entirely  satisfac- 
tory to  put  it  under  the  by-products  division,  and  work  the 
salvaging  of  material  right  along  with  the  reclaiming  of 
material. 

Keeping  Check  on  Material. — Should  you  desire  to  handle 
the  salvaging  of  material  in  the  by-products  division,  the  pro- 
duction department  will  send  all  such  material  to  the  reclama- 
tion department  on  the  proper  kind  of  a  transfer  ticket,  show- 
ing just  what  is  wrong  with  the  material. 

The  reclamation  department  will  then  determine  whether 
the  material  can  be  salvaged  and  put  back  into  the  line  of 
production.  If  so,  the  proper  work  will  be  done,  proper  rec- 
ords kept  according  to  your  cost  accounting  system,  and  the 
labour  and  material  charged  against  the  production  depart- 
ment. 

The  material  will  then  be  returned,  either  to  stock  or  to 
the  production  department,  as  the  case  may  be,  with  proper 
records  so  that  it  gets  back  into  the  books  of  the  company. 
Where  it  is  impossible  to  salvage  material,  it  then  goes 
through   the   process   of   reclamation. 

Reclaimed  Material. — The  reclaiming  of  material  must  be 
worked  so  closely  in  conjunction  with  the  actual  scrap  classi- 
fication of  material,  that  I  will  make  no  attempt  to  detail  the 
reclaiming  of  material  as  kept  by  the  proper  classification  of 
scrap.  For  example,  in  our  scrap  classification,  you  find  that 
imitation  leather  and  leathers  are  sorted  into  two  sizes;  one 
size  which  must  be  sold  as  scrap,  while  the  other  size  can  be 


SALVAGE  NOW  A  SCIENCE  247 

sold  as  reclaimed  material.  Another  example  is  the  new  sheet 
metal  clippings.  You  will  find  that  any  piece  of  sheet  metal 
out  of  which  a  five-inch  circle  can  be  cut,  is  kept  on  one  side, 
segregated  according  to  size  and  gauge,  and  kept  under 
cover  and  free  from  rust.  The  balance  of  the  sheet  metal 
clippings  are  put  through  the  hydraulic  compressor  to  be  put 
in  hydraulic  bundles  and  sold  as  scrap. 

Use  Your  Imagination. — In  order  to  handle  properly  the 
reclaiming  of  material,  one  should  be  able,  first,  to  dream  in- 
telligently, and  then  to  visualize.  By  dreaming,  I  mean  that 
one  must  be  able  to  use  his  imagination  very  liberally;  and 
by  intelligently,  I  mean  he  must  hold  the  use  of  his  imagma- 
tion  down  to  a  practical  basis.  By  being  able  to  visualize,  I 
mean  that  he  must  be  able  to  see  material,  not  as  it  is,  but 
as  it  can  be. 

For  example,  when  you  go  out  Into  the  yard,  and  see  a  large 
pile  of  scrap  lumber  which  a  receiving  department  has  torn 
apart  and  taken  off  in-coming  material  received,  and  which 
ordinarily  is  either  sold  as  kindling  or  taken  to  the  boilers  and 
used  as  fuel,  you  should  be  able  to  see  this  pile  of  lumber,  not 
as  scrap,  but  as  nice  new  boxes,  turned  over  to  the  shipping  de- 
partment for  use  in  shipping  your  material. 

Lumber  Reclamation  Pays. — This  reclaiming  of  lumber  is 
one  of  the  most  startling  features  of  reclamation  work,  and  is 
about  as  Important  from  a  money-making  standpoint  as  any 
work  In  the  plant.  A  higher  percentage  In  dividends  can  be 
earned  on  the  Investment  necessary  for  the  reclaiming  of  lum- 
ber, than  in  any  other  phase  of  the  by-product  work. 

All  boxes,  crates,  blocking  lumber,  and  the  like,  which  come 
into  the  plant  should  be  sent  to  the  lumber  reclamation  shed, 
which  is  properly  equipped  for  converting  scrap  lumber  into 
usable  material.  This  scrap  lumber  Is  taken  into  the  shed,  the 
nails  cut  off,  and  the  boards  cut  to  the  size  which  can  be  used 
to  best  advantage.  These  sizes  are  determined  from  infor- 
mation received  from  the  shipping  department  as  to  what 
size  boxes  and  crates  they  require,  and  how  many  per  month. 

When  this  lumber  is  cut  to  the  proper  length  and  properly 
prepared  for  boxes,  it  is  piled  neatly  according  to  size,  and 
either  delivered  to  the  shipping  department  in  the  form  of 
shocks  from  which  to  make  their  own  boxes,  or  the  boxes  are 
finished  in  the  reclamation  sheds  and  delivered  to  the  shipping 
department  as  needed.     It  is  much  more  economical  to  deliver 


248     PURCHASING  PRINCIPLES  AND  PRACTICES 

completed  boxes  to  the  shipping  department  than  for  them  to 
make  their  own,  but  in  some  instances  the  storage  space  in  the 
shipping  department  will  not  permit  it. 

Don't  Pull  Nails — Cut  them  Off. — In  connection  with  the 
reclamation  of  lumber,  never  waste  time  in  pulling  nails  or 
attempting  to  salvage  or  reclaim  nails.  Simply  cut  off  the 
end  of  the  board  with  the  crosscut  saw  and  throw  that  small 
piece  of  lumber  and  the  nails  away.  From  actual  figures  kept, 
it  has  been  determined  that  at  the  present  price  of  lumber, 
(1921),  it  costs  about  one  dollar  in  labour  and  supervision 
to  reclaim  six  dollars'  worth  of  lumber. 

Another  by-product  in  the  reclamation  of  lumber  is  kin- 
dling, which  can  be  sold  locally.  In  some  territories  it  actually 
pays  to  prepare  kindling  for  sale,  but  in  most  places,  if  your 
scrap  wood  left  after  making  boxes  is  not  readily  salable 
"as  is,"  it  is  of  more  value  to  carry  It  to  your  boiler  and  use 
it  as  fuel.  Your  sawdust,  of  course,  can  be  used  around  the 
plant,  or  if  you  have  a  surplus,   it  is  readily  salable. 

Disposition  of  Scrap. — In  handling  scrap,  in  almost  every 
plant,  it  pays  to  have  a  man  in  the  yard  who  takes  care  of  the 
physical  scrap.  For  convenience,  we  will  call  him  the  by- 
product foreman.  Also,  as  a  matter  of  convenience,  we  will 
call  the  purchasing  department  man  who  handles  the  by- 
product from  the  office,  the  by-product  manager.  Scrap 
material  is  that  which  Is  of  no  further  use  in  its  present  condi- 
tion. It  Is  therefore  necessary  to  sell  this  material,  and  the 
sale  win  be  handled  by  the  by-product  manager,  either  on 
open  market  bids  or  by  contract. 

From  the  viewpoint  of  economy,  and  for  the  purpose  of 
taking  scrap  out  of  the  speculative  field,  the  contract  Is  by 
far  the  best  arrangement;  and  from  actual  figures  kept  over 
a  period  of  two  years,  the  difference  in  the  price  received  on 
contracts  and  on  open  market  bids  Is  so  slight  that  the  con- 
tract is  by  far  the  best  method  of  disposing  of  scrap. 

Contract  for  the  Sale  of  Your  Scrap. — There  are  two 
trade  papers  which  are  accepted  as  standard:  one  Is  the  "Iron 
Age/'  published  In  New  York  City,  and  the  other  the  "Iron 
Trade  Review,"  published  In  Cleveland,  Ohio.  Both  of 
these  papers  are  published  weekly,  and  contain  quotations  on 
the  various  classifications  of  scrap  at  such  points  as  Pitts- 
burgh, Philadelphia,  Buffalo,  Cleveland,  Detroit,  Chicago. 
Therefore,  if  you  are  located  In  Toledo,  Ohio,  or  Flint,  Mich- 


SALVAGE  NOW  A  SCIENCE  249 

igan,  your  contract  would  be  based  upon  the  average  price  of 
the  classification  of  scrap,  as  quoted  in  the  trade  papers  on 
date  of  shipment,  less  the  freight  charges  from  Toledo  or 
Flint,  to  Cleveland,  Ohio,  less  the  handling  charge  of  the 
scrap  dealer. 

This  handling  charge  depends  upon  the  amount  of  scrap 
which  you  have  to  sell.  It  is  necessary,  of  course,  to  select 
three  or  four  high-grade  scrap  dealers  to  deal  with,  so  you 
will  not  have  to  negotiate  with  the  peddlers  or  dealers  whose 
reputations  are  sometimes  shady. 

Use  Car  Shipments  if  Possible. — It  is  a  good  policy  to 
have  sufficient  storage  space  for  handling  scrap  in  carloads  of 
each  classification,  in  order  to  eliminate  the  expensive  process 
of  hauling  the  material  from  your  plant.  Some  plant  mana- 
gers have  said  it  costs  nothing  to  have  the  material  hauled 
from  their  plant  because  the  scrap  dealer  did  the  hauling. 

My  experience  has  been  that  one  never  gets  anything  for 
nothing,  and  whatever  the  cost  of  hauling,  the  plant  stands  the 
expense  in  some  manner  or  other. 

Another  very  distinct  advantage  of  the  contract  Is  that 
the  scrap  dealer  with  whom  you  have  a  contract  will  furnish 
shipping  instructions  ahead  of  time,  so  that  as  soon  as  you 
have  a  car  of  scrap  ready  it  can  be  loaded  and  got  out  of  the 
plant.  This  Is  Important  during  normal  times,  because  scrap 
accumulates  so  quickly,  and  storage  space  is  at  a  premium. 

Planning  Shipments  of  Scrap. — Assuming  that  you  have 
made  contracts  with  a  good  reliable  dealer,  about  the  25th  of 
each  month,  the  by-product  foreman  will  report  to  the  by- 
product manager  the  approximate  amount  of  each  classifica- 
tion of  scrap  he  expects  to  accumulate  during  the  following 
month.  The  by-product  manager  thereupon  gives  his  scrap 
dealer  this  Information,  and  immediately  the  scrap  dealer 
sends  shipping  Instructions  covering  the  material.  It  is  under- 
stood by  both  parties  that  quantities  are  only  approximate. 

When  the  by-product  manager  receives  the  shipping  in- 
structions, he  issues  regular  order  blanks  used  within  the 
plant  to  have  this  material  shipped  out  as  it  is  accumulated, 
and  from  this  point  forward,  the  by-product  foreman  is  re- 
sponsible for  seeing  that  the  material  is  properly  classified, 
properly  loaded  so  that  each  carload  will  have  minimum 
weight.  In  accordance  with  the  railroad  classifications,  and  that 
it  is  shipped  in  accordance  with  the  desires  of  the  purchaser. 


250     PURCHASING  PRINCIPLES  AND  PRACTICES 

As  each  carload  is  shipped,  the  by-products  foreman  will 
give  the  by-product  manager  full  details — the  car  num- 
ber, gross  weight,  tare  weight  and  net  weight,  classifica- 
tion of  scrap  in  the  car,  to  whom  it  is  being  shipped,  to  whose 
account,  routing,  etc.  This  information  is  immediately  trans- 
mitted to  the  scrap  dealer  with  whom  the  by-product  manager 
has  his  contract,  so  he  can  notify  his  customer  that  the  car  is 
on  the  way. 

Records  of  Scrap  Shipments. — As  the  material  is  shipped, 
the  by-product  manager  should  keep  an  accurate  record  of 
the  actual  amount  of  scrap  shipped,  giving  the  date,  car  num- 
ber and  initials,  gross,  tare  and  net  weight;  to  whom  shipped, 
for  whose  account,  routing,  etc.;  so  that  at  any  time  in  the 
future,  easy  reference  can  be  had  to  these  statistics.  No 
special  form  is  required  for  these  records,  as  experience  has 
shown  that  an  ordinary  record  voucher  book,  such  as  can  be 
purchased  at  any  stationery  store  for  a  nominal  sum,  is  best 
adapted  for  this  work. 

It  is  not  necessary  to  have  any  special  order  blanks  or 
shipping  instructions  for  scrap,  but  in  case  the  regular  system 
of  orders  within  the  plant  does  not  allow  a  copy  of  the  order 
and  a  copy  of  the  invoice  to  come  back  to  the  by-product 
manager,  it  should  be  arranged  so  that  an  extra  white  copy 
of  each  may  be  sent  to  the  by-product  manager  for  his  file. 
Simple  Record  Systems. — The  by-product  manager  should 
keep  in  his  office  a  copy  of  the  records  and  shipping  instruc- 
tions, against  which  is  attached  a  copy  of  the  order,  and 
against  this  is  attached  a  copy  of  the  invoice  to  show  that 
the  transaction  is  completed. 

These  invoices  can  then  be  filed  according  to  month,  and 
according  to  the  class  of  scrap  shown  thereon,  so  that  at  the 
end  of  each  month,  when  it  is  desirable  to  know  how  much 
of  each  kind  of  scrap  has  been  shipped  per  month,  and  the 
amount  of  money  received,  it  Is  only  necessary  to  take  an 
adding  machine  total  of  invoices  under  each  classification  of 
scrap,  and  add  the  entire  lot  to  get  your  grand  total  of  scrap 
shipped  and  money  received.  This  saves  a  lot  of  bookkeeping. 
Keep  the  Quality  Up. — It  is  the  duty  of  the  by-product 
manager  to  see  that  the  by-product  foreman  is  thoroughly  in- 
structed regarding  the  classification  of  scrap.  At  no  time 
should  the  by-product  foreman  allow  material  other  than 
that  sold  to  be  shipped.     If  your  scrap  Is  not  properly  class!- 


SALVAGE  NOW  A  SCIENCE  251 

fied,  kept  clean  and  run  uniform,  it  not  only  means  a  bad  repu- 
tation with  the  mills,  but  it  means  an  expense  because  of  rejec- 
tion, and  the  necessity  of  re-shipping,  or  making  allowances 
in  order  to  get  the  material  taken  in.  You  cannot  sell  one 
thing  and  ship  another  thing  without  getting  into  trouble. 

Cost  Records. — Unless  the  cost  department  of  your  com- 
pany is  prepared  to  keep  a  proper  record  of  the  labor  costs, 
supervision,  etc.,  it  is  desirable  and  proper  for  the  by-product 
manager  to  keep  an  accurate  record  of  these  items,  as  well  as 
the  quantity  and  quality  of  material  shipped,  so  that  at  the 
end  of  each  month  he  can  show  how  much  it  costs  his  com- 
pany to  handle  scrap  per  ton,  and  can  make  comparisons  with 
the  previous  month.  His  endeavour  should,  of  course,  always 
be  to  keep  this  handling  charge  down  to  the  minimum. 

Only  by  keeping  accurate  records  can  you  know  where  you 
are  going.  In  the  larger  plants,  wc  even  go  so  far  as  to  keep 
the  record  of  the  amount  of  scrap  coming  out  of  each  division 
of  the  production  department,  so  that  when  we  get  excessive 
amounts  of  scrap  from  certain  departments,  we  can  take  up 
the  matter  with  them  and  help  them  to  determine  the  causes. 

We  have  found  in  shop  practice  as  a  rule,  that  the  cause  for 
excessive  scrap  out  of  a  certain  department  is  either  improper 
Inspection  of  material  as  it  is  received  in  the  plant,  or  green 
workmen.  If  it  is  improper  inspection,  this  can  be  easily  cor- 
rected, and  if  it  is  green  workmen,  we  must  expect  a  certain 
amount  of  excessive  scrap  at  first. 

Classification  of  Scrap. — There  are  four  general  classifica- 
tions of  scrap  in  industrial  works: 

1.  Iron  and  steel  scrap. 

2.  Non-ferrous  scrap,  such  as  aluminum  scrap,  brass,  cop- 
per, bronze,  etc. 

3.  Trim  shop  scrap,  such  as  leather,  imitation  leather, 
duck,   drill,   buckram,   etc. 

4.  Miscellaneous  scrap,  such  as  barrels,  glass,  etc. 

All  scrap  removed  from  the  various  parts  of  the  factory 
to  the  by-product  shed  should  be  removed  on  transfer  tickets, 
showing  the  class  of  scrap  and  from  what  department  it  is  sent. 
These  tickets  will  be  filed  according  to  departments  in  the  by- 
product shed,  to  permit  comparisons  with  the  amount  of 
scrap  coming  out  of  each  department  from  month  to  month. 

It  is  not  economical  to  attempt  to  sort  scrap  after  it  has 
been  received  at  the  by-product  shed,  and  it  will  therefore  be 


252     PURCHASING  PRINCIPLES  AND  PRACTICES 

the  duty  of  the  by-product  foreman  to  see  that  the  scrap  comes 
to  him  properly  classified  from  the  several  departments  of  the 
plant.  When  he  does  receive  mixed  scrap,  he  will  take  the 
proper  steps  to  remedy  this  condition. 

Keep  the  Scrap  Clean. — It  is  also  the  duty  of  the  by- 
product foreman  to  see  that  scrap  is  kept  clean.  By  the  word 
"clean,"  we  mean  that  it  shall  be  free  from  all  foreign  sub- 
stances, such  as  soap  cans,  tobacco  cans,  old  gloves,  rags,  and 
the  like,  and  that  the  salvage  department  separate  assemblies 
containing  more  than  one  class  of  scrap. 

In  other  words,  brass,  aluminum,  bronze,  babbitt,  etc., 
should  not  come  attached  to  pieces  of  steel,  malleable  iron, 
castings,  etc.  In  such  cases,  where  it  is  not  economical  to 
dis-assemble  a  part  which  contains  possibly  a  brass  bushing  in 
a  piece  of  cast-iron,  the  entire  piece  of  scrap  will  be  put  into 
what  Is  known  as  miscellaneous  scrap  and  disposed  of  as 
such. 

The  by-product  foreman  must  be  held  responsible  for  the 
proper  classification  of  scrap,  as  well  as  its  cleanliness.  It  is 
up  to  him  to  make  and  maintain  for  your  company  a  reputa- 
tion with  the  steel  mills  and  foundries,  which  is  of  the  best. 

The  by-product  foreman  will  report  to  the  by-product  man- 
ager his  labor  costs,  so  that  the  by-product  manager  can 
analyze  this  item,  and  compare  it  at  regular  intervals  in 
order  to  reduce  the  cost  per  ton  of  handling  scrap  from 
month  to  month. 

Iron  and  Steel  Scrap. — Iron  and  steel  scrap  will  be  prop- 
erly segregated  in  the  scrap  bins  provided,  and  everything 
which  can  be  properly  placed  under  a  specific  classification  will 
be  put  in  the  proper  bin,  in  order  to  eliminate,  as  far  as 
possible,  miscellaneous  iron  and  steel  scrap.  Miscellaneous 
iron  and  steel  scrap  must  be  sold  to  local  dealers,  who  will 
ship  It  Into  their  own  yards  and  prepare  It  further  for  steel 
mill  or  foundry  consumption.  The  seller  should  endeavour  to 
do  this  separating  himself  as  far  as  it  is  economical  to  do  so. 

The  Classification  of  Iron  and  Steel  Scrap. — Heavy  Melt- 
ing Steel. — In  this  classification  can  be  put  all  pieces  of  heavy 
steel  which  are  three-eighths  inch  and  over  in  thickness,  five 
feet  and  under  in  length,  and  not  over  18  inches  In  width;  or 
in  other  words,  what  is  known  as  "charging  box  size."  The 
minimum  weight  should  be  ten  pounds  and  the  maximum 
weight  300  pounds,  to  any  one  piece. 


SALVAGE  NOW  A  SCIENCE  253 

Shovelling  Steel. — In  this  classification  can  be  all  steel  not 
taken  In  heavy  melting  steel  classification,  which  Is  one-fourth 
inch  and  over  In  thickness  and  not  over  eight  Inches  long. 

Drop  Forge  Flashings. — These  flashings  are  the  trimmings 
from  steel  forglngs,  and  for  economical  sale,  should  be  sep- 
arated into  two  classes:  those  flashings  which  are  eight  inches 
and  shorter,  and  those  which  are  over  eight  inches  long.  The 
shorter  flashings  will  usually  bring  a  better  price  than  the  long 
ones,  or  long  and  short  mixed. 

No.  1  Busheling. — This  classification  consists  of  clean 
wrought  iron  and  soft  steel  pipes  and  flues,  tank  scrap  and 
bands,  boiler  plate  punchlngs  and  clippings,  soft  steel  and  iron 
drop  forglngs  and  trimmings.  Nothing  in  this  classification 
may  be  less  than  12  gauge,  nor  over  eight  inches  long  or  wide. 

No.  2  Busheling. — This  classification  will  take  such  mate- 
rial as  is  not  classified,  under  number  one  busheling,  such  as 
cut  tubes,  sheets,  ties  and  similar  light  weight  material.  Noth- 
ing must  be  over  eight  inches  long  or  wide. 

Cast  Iron  Borings. — Cast  iron  borings  are  the  borings  from 
cast  iron  castings,  and  must  be  free  from  dirt,  other  metal, 
and  lump. 

Heavy  Steel  Turnings. — These  shall  consist  of  wrought 
iron  and  soft  steel  turnings,  very  heavy  and  short,  such  as 
come  from  the  first  and  second  cuts  from  axles  and  heavy 
forglngs. 

Short  Steel  Turnings. — This  consists  of  wrought  iron  and 
soft  steel  turnings,  which  are  short  enough  to  be  shovelled 
easily,  and  not  tangled. 

Machine  Shop  Turnings. — Ordinary  wrought  Iron  and  soft 
steel  turnings,  such  as  come  from  ordinary  machine  shop 
practice. 

Mixed  Borings  and  Turnings. — This  shall  consist  of  small 
turnings  and  drillings  In  the  ferrous  line  where  it  is  not  prac- 
tical or  possible  to  separate  the  borings  from  the  turnings. 

Hydraulic  Sheet  Clippings. — This  classification  will  Include 
only  new,  clean,  black  steel  scrap,  such  as  sheet  clippings, 
stampings,  etc.,  compressed  into  a  bundle  by  a  hydraulic 
compressor.  The  bundles  must  not  exceed  18  inches  in  any 
dimension. 

Loose  Sheet  Clippings. — This  material  must  be  new,  black 
sheet  steel  scrap,  not  over  five  feet  long  or  18  inches  wide, 
and  must  be  loose  to  permit  easy  unloading.    Any  pieces  that 


254     PURCHASING  PRINCIPLES  AND  PRACTICES 

will  cut  into  5-inch  circles  or  larger,   should  be  sorted  into 
sizes  and  gauges,  kept  clean,  and  sold  as  reclaimed  material. 

Hydraulic  Galvanized  Clippings. — This  classification  will 
be  the  same  as  the  hydraulic  sheet  clippings,  except  that  it  Is 
to  contain  galvanized  scrap  instead  of  new  black  scrap. 

Galvanized  Loose  Sheet  Clippings. — This  classification  will 
be  the  same  as  loose  sheet  clippings,  black,  except  that  the 
scrap  is  to  be  galvanized. 

Hydraulic  Tin  Plate  Clippings. — This  must  be  the  same  as 
hydraulically  compressed  sheet  clippings  except  that  it  is 
to  be  tin  plate  instead  of  black. 

Loose  Tin  Plate  Clippings. — This  classification  is  the  same 
as  loose  sheet  clippings,  except  that  the  scrap  is  to  be  tin  plate. 

Cast  Iron  Wheels. — This  classification  will  include  all  solid 
cast  iron  wheels,  either  locomotive  or  car. 

Built-up  Wheels. — This  classification  will  include  all  kinds  of 
built-up  or  steel-tired  wheels,  either  locomotive  or  car. 

Solid  Wheels. — This  classification  to  include  all  solid  rolled, 
forged,  or  cast  steel  wheels,  either  locomotive  or  car. 

No.  1  Wrought  Iron  Scrap. — This  classification  includes 
principally  clean  wrought  iron  from  railroad  equipment,  in 
pieces  six  inches  long  and  longer,  and  one-quarter  inch  thick 
and  heavier. 

No.  2  Wrought  Iron  Scrap. — This  classification  includes 
wrought  iron  and  soft  steel,  six  inches  long  and  that  which  is 
not  specified  in  No.  1  wrought  iron  scrap.  This  will  include 
such  material  as  bolts  and  nuts,  rivets,  spikes,  etc. 

Malleable  Scrap. — Includes  all  kinds  of  malleable  castings, 
no  piece  to  weigh  more  than   150   pounds. 

Annealing  Pots. — ^Worn  out  annealing  pots  from  malleable 
iron  foundries.  It  is  usually  advisable  to  have  the  scrap  deal- 
ers inspect  this  material  in  order  to  get  the  best  price. 

No.  1  Cast  Iron. — This  classification  shall  consist  of  cast 
iron  scrap  of  good  quality  which  possesses  evidence  of  having 
been  machined,  such  as  planed  or  turned  surfaces,  bored  or 
drilled  holes.  It  must  be  not  more  than  150  pounds  to  a 
piece  in  weight,  and  must  not  exceed  24  inches  in  any 
dimension. 

Heavy  Breakable  Cast  Iron  Scrap. — This  class  of  material 
may  contain  either  cast  iron  machinery,  or  machine  grade  cast 
iron  in  unbroken  condition,  but  suitable  for  breaking  under 
a  drop  hammer;  or  such  cast  iron  scrap   as  columns,  pipe, 


SALVAGE  NOJV  A  SCIENCE  255 

plates,  etc.,  which  can  be  broken  under  a  drop  hammer.  This 
classification  is  different  at  different  consuming  points,  and  it 
will  be  well  to  have  the  scrap  dealer  inspect  this  material  be- 
fore selling,  in  order  that  you  may  get  the  best  price.  For 
instance,  some  mills  will  accept  as  much  as  15  percent,  of  the 
total  weight  to  consist  of  steel  attachments,  and  will  take 
pieces  weighing  as  much  as  ten  tons.  Other  mills  will  not 
accept  heavy  breakable  cast  iron  which  has  any  steel  attach- 
ments whatever,  and  will  not  accept  pieces  weighing  more 
than,  2,500  pounds  each. 

No.  I  Stove-Plate  Scrap. — This  consists  of  clean  stove- 
plate,  and  must  not  contain  any  malleable  iron  and  steel  parts, 
burnt  iron,  etc. 

Hiffh  Speed  Tool  Steel. — This  must  contain  at  least  15 
percent,  tungsten,  and  should  be  inspected  by  the  scrap  dealer 
before  purchasing,  in  order  to  secure  the  best  price. 

Burnt  Cast  Iron. — This  will  consist  of  such  things  as  grate 
bars,  annealing  pots,  and  cast  iron  scrap  which  has  been 
badly  oxidized  by  burning.  This  material  should  be  shown 
before  selling. 

Die  Blocks. — This  shall  consist  of  cast  iron  die  blocks  not 
over  1 8  inches  wide  or  thick,  and  less  than  five  feet  long. 

Non-ferrous  Scrap. — Method  of  Handling. — Non-ferrous 
scrap  should  at  all  times  be  kept  under  cover,  and  it  is  very 
important  that  the  various  kinds  of  non-ferrous  scrap  be  kept 
separate.  For  example,  brass  borings  and  turnings  should 
not  be  mixed  with  copper;  nor  should  iron,  steel,  or  lead  be 
mixed  with  copper,  brass,  aluminum,  etc. 

The  handling  of  non-ferrous  scrap  is  most  economically  ac- 
complished by  this  system :  the  by-product  foreman  should 
provide  a  sufficient  number  of  boxes  or  barrels,  so  that  each 
class  of  non-ferrous  scrap  can  be  kept  in  a  separate  container. 
Before  any  material  is  placed  in  a  container,  the  con- 
tainer, including  the  cover,  should  be  weighed  empty,  and  the 
tare  weight  should  be  stencilled  on  the  end  of  the  container. 
The  class  of  scrap  which  is  to  be  placed  in  this  container 
should  also  be  stencilled  on  the  end  of  the  container. 

As  soon  as  the  container  is  full  of  its  own  kind  of  scrap, 
the  cover  should  be  immediately  secured,  and  it  should  be 
weighed  at  once.  The  gross  weight  as  well  as  the  net  weight 
should  then  be  stencilled  on  the  end  of  the  box,  and  the  con- 


256     PUR  CHASING  PRINCIPLES  AND  PR  AC  TICKS 

tainer  given  a  number.  These  numbers  should  start  with  No. 
1,  and  run  consecutively. 

All  of  the  above  Information  should  be  placed  on  the  end 
of  the  container,  so  that  as  the  containers  are  piled  on  top 
of  each  other,  the  information  showing  the  container  number, 
the  gross,  tare,  and  net  weight,  and  the  class  of  scrap  which 
It  contains,  will  be  visible.  As  these  containers  are  filled,  they 
should  be  piled  in  a  convenient  place  under  cover,  and  a  record 
of  each  container  with  full  information  should  be  given  to  the 
by-product  manager. 

The  by-product  manager  will  keep  a  record  of  these  con- 
tainers, in  order  to  know  at  all  times  the  quantity  of  each 
kind  of  non-ferrous  scrap  on  hand,  and  the  proper  time 
to  make  a  shipment. 

Aluminum  borings  and  turnings  should  be  dried  as  much  as 
possible  and  then  placed  In  burlap  bags  instead  of  boxes  and 
barrels;  otherwise  they  may  be  handled  as   above. 

Classification  of  Non-ferrous  Scrap. — The  classification 
covering  non-ferrous  scrap  as  adopted  by  the  Waste  Material 
Dealers,  Incorporated,  is  as  follows: 

Heavy  Copper. — This  shall  consist  of  copper  not  less  than 
1-16  Inch  thick,  and  may  include  trolley  wire,  heavy  field  wire, 
heavy  armature  wire  that  Is  not  tangled,  and  also  new  copper 
clippings  and  punchings,  untlnned  and  clean,  and  copper  seg- 
ments that  are  clean. 

No.  1  Copper  Wire. — To  consist  of  clean  untlnned  copper 
wire  not  smaller  than  No.  16  B.  &  S.  wire  gauge,  to  be  free 
from  copper  wire  which  is  burned  brittle,  and  free  from  all 
foreign  substances. 

No.  2  Copper  Wire. — To  consist  of  miscellaneous  clean 
copper  wire,  such  as  of  necessity  would  be  taken  out  of  the 
heavy  copper  and  the  No.  1  copper  wire,  but  to  be  free  of  hair 
wire,  and  burnt  wire  which  is  brittle. 

Light  Copper. — Shall  consist  of  the  bottoms  of  kettles  and 
boilers,  bath  tub  linings,  hair  wire,  burnt  copper  wire  which 
Is  brittle,  roofing  copper  and  similar  copper,  free  from  radi- 
ators^ brass,  lead,  solder  connections,  readily  removable  iron, 
old  electrotype  shells,  and  free  from  excessive  paint,  tar  and 
scales. 

Composition  or  Red  Brass. — Shall  consist  of  red  scrap, 
brass,  valves,  machinery  bearings  and  other  parts  of  machin- 
ery including  miscellaneous  castings  made  of  copper,  tin,  zinc 


SALVAGE  NOW  A  SCIENCE  257 

or  lead;  no  piece  to  measure  more  than  12  inches  over 
any  one  part;  to  be  free  of  aluminum  and  manganese;  also 
free  of  railroad  boxes,  cocks  and  faucets,  gates,  pot  pieces, 
ingots  and  burned  brass. 

Railroad  Bearings. — Shall  consist  of  railroad  boxes  or  car 
journal  bearings;  must  be  old  standard  used  scrap,  free  of 
yellow  boxes,  plastic  and  similar  bearings;  also  iron-backed 
boxes.  All  must  be  free  of  babbitt,  and  excessive  grease  and 
dirt. 

Cocks  and  Faucets. — To  be  mixed  red  and  yellow,  free  of 
gas  cocks  and  beer  faucets;  shall  be  at  least  half  red. 

Heavy  Yellow  Brass. — Shall  consist  of  heavy  brass  cast- 
ings, rolled  brass,  rod  brass  ends,  brass  screws  and  tinned  or 
nickel-plated  brass  tubing;  to  be  free  of  iron  and  dirt  and 
must  be  in  pieces  not  too  large  for  crucibles;  no  piece  to  meas- 
ure more  than  12  inches  over  any  one  part.  Must  also  be  free 
of  aluminum  and  manganese  mixtures.  Condenser  tubes  shall 
not  be  considered  as  heavy  brass. 

Light  Brass. — Shall  consist  of  light  sheet  brass,  forks, 
spoons,  and  miscellaneous  brass  that  is  too  light  for  heavy. 
Must  be  free  of  any  visible  Iron,  radiators,  gun  shells  con- 
taining paper,  ashes  or  iron,  loaded  lamp  bases  and  clock 
works. 

New  Brass  Clippings. — Shall  consist  of  the  cuttings  of  new 
sheet  brass,  must  be  absolutely  clean  and  free  from  any  foreign 
substances. 

Brass  Tubing. — Shall  consist  of  brass  tubing,  free  of  nickel 
plating,  tin,  solder,  or  tubes  with  cast  brass  connections. 
To  be  sound,  clean  tubes,  free  of  sediment  and  condenser 
tubes. 

No.  1  Composition  Turnings. — To  be  free  of  aluminum, 
manganese,  plastic  and  yellow  brass  turnings,  not  to  contain 
over  2  percent.  Iron,  to  be  free  of  grindlngs  or  foreign  ma- 
terial, especially  babbitt,  and  free  of  adulterations  made  to 
resemble  metal.  Turnings  not  according  to  this  specification 
will  be  subject  to  sample. 

No.  1  Yellow  Brass  Turnings. — Shall  consist  of  strictly  rod 
turnings,  free  of  aluminum,  manganese,  composition  and  tobin 
turnings.  Not  to  contain  over  3  percent,  of  Iron,  oil  or  other 
moisture;  to  be  free  from  grindlngs  and  babbitt.  To  avoid 
dispute,  to  be  sold  subject  to  sample. 

No.  1  Pewter. — Shall  consist  of  table  ware  and  soda  foun- 


258     PURCHASING  PRINCIPLES  AND  PRACTICES 

tain  boxes,  but  in  any  case  must  test  84  percent,  tin.  Syphon 
tops  to  be  bargained  for  separately. 

Auto  Radiators. — To  be  classed  separately;  must  be  free 
from  Iron. 

Zinc. — Must  consist  of  clean  sheet  and  cast  zinc,  also  cast 
batteries,  free  of  loose  oxide  and  dross,  and  sal  ammoniac 
cans  and  other  foreign  materials. 

Tin  Foil. — Shall  consist  of  pure  foil,  free  of  lead  composi- 
tions and  other  foreign  Ingredients. 

Electrotype  Shells. — Must  be  hand  picked  and  free  of 
dross. 

Battery  Lead  Plates. — Shall  consist  of  dry  battery  lead 
plates,  free  from  wood,  rubber  and  paper.  Moisture  must 
not  exceed  1  percent. 

New  Sheet  Aluminum  Clippings. — Shall  consist  of  new 
sheet  aluminum  and  cuttings.  Must  be  free  from  oil,  grease 
and  any  other  foreign  substances.  Must  be  guaranteed  not 
less  than  98  percent,  pure  aluminum. 

Aluminum  Wire. — Shall  consist  of  aluminum  wire  guar- 
anteed 98  to  99  percent,  pure  aluminum,  and  must  be  free 
from  corrosion,  and  any  foreign  substance. 

Painted  Sheet  Aluminum. — Shall  consist  of  painted  sheet 
aluminum,  and  must  be  absolutely  free  from  iron,  dirt  or  any 
other  foreign  substance. 

Aluminum  Castings. — Shall  consist  of  aluminum  castings, 
free  from  iron,  babbitt,  brass  and  any  other  foreign  sub- 
stance.    Must  not  exceed  2  percent,  of  oil  and  grease. 

Old  Sheet  Aluminum. — Shall  consist  of  old  and  manufac- 
tured sheet  aluminum.  Must  be  free  from  painted  sheet 
aluminum,  iron,  dirt,  and  any  other  foreign  substance. 

Aluminum  Borings. — To  avoid  dispute,  should  be  sold 
subject  to  sample. 

Aluminum  Foil. — Shall  consist  of  pure  aluminum  foil,  free 
from  paper  and  any  foreign  ingredients. 

Babbitt  Metal. — Shall  contain  bearing  metal  of  all  kinds. 
Shall  not  contain  scrap  hard  metal,  Allen  metal  (which  is 
copper  and  lead  alloy),  die  casts,  zinc  boxes  or  type  metal. 

Monel  Metal  Scrap. — Must  be  In  sheets,  clippings,  cast- 
ings, bars,  or  rods.  Must  be  free  of  Iron  and  other  foreign 
materials.  To  avoid  disputes,  should  be  sold  subject  to 
sample. 


SALVAGE  NOW  A  SCIENCE  259 

Monel  Metal  Turnings. — Must  be  free  of  iron  and  any 
undue  percentage  of  oil  and  moisture.  To  avoid  disputes, 
should  be  sold  subject  to  sample. 

Trim  Shop  Scrap. — Scrap  material  from  the  trim  shop 
will  be  properly  segregated  according  to  classification,  and 
held  In  bags  or  other  containers  until  a  sufficient  quantity  has 
been  accumulated  for  a  shipment. 

As  this  material  accumulates,  and  is  placed  in  containers, 
the  containers  will  be  numbered  and  tagged,  marked  with 
the  weight,  and  reported  to  the  by-product  manager  in  the 
same  manner  as  non-ferrous  scrap. 

The  classification  covering  trim  shop  material  is  as  follows: 

Buckram. — Buckram  cuttings  of  all  sizes  and  shapes — baled. 

Burlap. — A.  Sizes  one  square  yard  In  area  and  over, 
clean  and  suitable  for  re-use,  must  be  of  uniform  grade — 
baled.  B.  Soiled  and  torn  pieces  of  any  size,  including  v/orn- 
out  bagging — baled. 

Carpet. — A.  Carpet  cuttings  4  Inches  x  9  Inches  and 
larger  of  clean  stock  In  bags.  B.  Carpet  cuttings  smaller 
than  4  Inches  x  9  Inches  or  soiled  larger  pieces — baled. 

Celluloid. — A.  Pieces  5  Inches  x  10  Inches  or  larger  of 
uniform  thickness  that  arc  free  from  scratches.  B.  All 
small  cuttings  under  4  Inches  x  10  Inches  and  soiled  or 
scratched  larger  pieces. 

Cotton  TVadding. — White  or  colored  wadding  and  batting 
free  from  cloth,  leather,  tacks,  paper,  and  other  foreign 
matter — baled. 

Leather. — ^A.  Clean  uniform  pieces  from  which  a  4-inch 
circle  or  larger  may  be  cut.  B.  Small  leather  cuttings  under 
4  Inches  In  any  dimension,  Including  soiled  larger  pieces — 
baled. 

Fahrikoid. — ^A.  Clean  cuttings  of  uniform  grade  over  4 
inches  x  9  Inches  In  size.  B.  All  cuttings  under  4  inches  x  9 
inches  and  soiled  larger  pieces — baled. 

Rags. — A.  White  cotton  clippings — baled.  B.  Coloured 
cotton  clippings — baled.  C.  Re-washed  white  or  coloured 
rags — baled. 

Rubber  Top  Material. — ^A.  Clean  rubber  auto  top  ma- 
terial 4  inches  x  9  Inches  and  larger,  free  from  seams,  fast- 
eners, celluloid,  etc.  B.  Rubber  top  cuttings  smaller  than  4 
inches  x  9  inches  and  soiled  larger  pieces — baled. 


260     PURCHASING  PRINCIPLES  AND  PRACTICES 

Veloiir  Cuttings. — A.  Clean  cuttings  of  uniform  grade  4 
inches  x  9  inches  and  larger.  B,  Cuttings  of  all  kinds  smaller 
than  4  inches  x  9  inches  and  soiled  larger  pieces — baled. 

Hair. — All  hair  wadding  or  pads  to  be  sold  upon  inspection. 

Miscellaneous  Scrap.  —  Classification.  —  Miscellaneous 
scrap  around  the  plant  is  all  material  which  cannot  properly 
be  classified  under  iron  and  steel,  non-ferrous,  and  trim  shop. 
A  synopsis  of  such  material  follows.  There  is  no  standard 
classification  for  this  kind  of  material,  as  it  will  probably  not 
be  the  same  in  any  one  plant  from  month  to  month. 

1.  Barrels.  A.  Sound,  heavy,  double-headed  barrels  that 
have  been  used  for  such  material  as  kerosene,  turpentine,  alco- 
hol, light  oils,  etc.,  and  which  can  be  easily  cleaned  by  steaming. 

B.  Sound,  heavy,  double-headed  barrels  that  have  been 
used  for  heavy  oils,  and  greases,  paint,  enamel,  etc.,  and  which 
cannot  be  easily  cleaned  by  steaming. 

C.  Single-headed  sound,  heavy  barrels  that  have  been 
used  for  soap,  greases,  etc. 

D.  Single-headed  clean  packing  barrels  that  have  been 
re-used  for  packing  purposes. 

E.  Sound  black  barrels. 

2.  Belting. — Used  leather  belting,  any  length  and  over 
3   inches  wide,  that  have  been  worn   off. 

3.  Ctillet. — Broken  pieces  of  all  grades  of  clear  glass 
under  6  inches  square  and  including  strips  under  4  inches  wide 
and  18  inches  long. 

4.  Paper. — A.  Books  and  catalogues  and  manila  stock — 
baled.  B,  Mixed  lots  of  all  grades  and  colours,  including 
strawboard — baled. 

5.  Rubber. — A.  Soft  rubber  free  from  fabric  and  attach- 
ments of  other  material,  including  sheet  rubber  clippings  and 
tubes,  etc.  B.  Rubber  with  fabric,  such  as  mattings  and 
hose. 

6.  Tires. — A.  Slightly  used  or  damaged  new  tires.  B. 
Used  tires  with  broken  fabric.  C.  Worn  out  tires  that  have 
been  blown  out  or  badly  rim  cut. 

7.  Any  other  items  that  can  be  sold  for  re-use  such  as 
bricks,  cans,  cinders,  etc. 


Chapter  XXIX 

PROGRESS  IN  COOPERATIVE  BUYING 

Saving  Expenses. — Before  I  became  a  purchasing  agent, 
I  very  often  thought  over  the  economic  possibilities  of  coop- 
erative buying,  or  the  pooHng  of  the  orders  of  various 
firms  and  institutions.  If,  I  argued,  the  sales  expense 
in  any  line  of  business  is  10  percent.,  the  consumers  could  save 
at  least  half  that  amount  for  themselves  if  they  would  cooper- 
ate in  reducing  or  eliminating  this  cost.  It  is  manifestly  not 
possible  or  desirable  to  eliminate  all  the  sales  effort  of  the 
vendors  in  many  lines,  but  there  is  certainly  a  large  amount  of 
waste  in  handling  the  sales  of  many  business  houses.  If  we 
could  get  together  and  eliminate  this  expense,  we  ought  to  be 
able  to  secure  for  ourselves  at  least  a  part  of  the  saving 
effected  in  the  form  of  lower  unit  prices. 

The  first  real  progress  was  made  in  connection  with  the 
Association  of  American  Colleges  in  1917,  after  the  following 
report  was  presented  at  the  annual  meeting  held  in  Chicago: 

The  Report. — "For  generations  the  purchasing  agent,  like 
the  small  country  dealer,  has  been  content  to  go  it  alone.  He 
has  held  aloof  because  of  his  fear  of  disclosing  trade  secrets, 
and  having  the  other  fellow  'steal  his  thunder.'  Of  late, 
however,  some  purchasing  agents  have  been  known  to  admit 
that  there  is  really  nothing  mysterious  about  the  business  of 
buying  goods,  and  some  of  us  have  found  it  very  profitable  to 
discuss  trade  conditions  with  other  buyers.  We  have  finally 
reached  the  point  where  it  has  been  possible  to  form  a  Na- 
tional Association  of  Purchasing  Agents,  with  21  branches 
stretching  from  New  York  to  Los  Angeles.  The  local 
association  has  117  members.^ 

"In  addition  to  the  associations  of  buyers  of  varied  lines 
for  the  exchange  of  ideas,  many  dealers  and  manufacturers  in 
allied  lines  have  found  it  profitable  to  form  buying  organiza- 

*The  1922  figures  are:  35  branches  and  350  local  members. 

261 


262     PURCHASING  PRINCIPLES  AND  PRACTICES 

tions,  jointly  to  serve  many  firms  who  compete  for  the  same 
market.  The  associated  furniture  factories  in  Grand  Rapids 
maintain  a  purchasing  department  in  Chicago  which  charges 
10  percent,  on  all  purchases  made. 

"The  clothing  manufacturers  of  New  York  employ  a  single 
purchasing  agent.  The  Biddle  Purchasing  Association  of 
Chicago  and  New  York  has  served  the  hardware  jobbers  of 
the  country  for  40  years,  and  has  served  some  clients  for  more 
than  30  years. 

Joint  Purchasing  Office  Suggested. — "I  understand  that 
the  eleemosynary  Institutions  in  many  localities  effect  econo- 
mies of  time  and  effort  by  cooperating  In  the  handling  of 
many  phases  of  their  work.  This  enables  them  to  handle 
more  cases  with  greater  speed  and  less  cost.  There  Is  even 
a  certain  amount  of  cooperation  In  the  raising  of  funds,  but 
I  know  of  no  city  where  the  purchases  of  the  various  institu- 
tions have  been  combined.  Is  It  not  fitting  that  the  city  that 
has  led  In  so  many  other  respects  should  be  the  first  to 
inaugurate  this  farther  step? 

"The  best  brains  of  the  country  are  at  your  disposal  In  the 
raising  of  funds,  and  in  the  management  of  other  phases  of 
this  work,  but  many  more  men  of  big  vision  would  lend  their 
backing  if  this  farther  economy  were  effected.  If  business 
houses  find  it  profitable  to  combine  their  purchases,  would  it 
not  be  even  more  advantageous  for  educational  institutions, 
with  their  huge  expenditures  and  limited  administrative 
forces,  to  set  up  a  joint  purchasing  office? 

Value  of  Group  Experience. — "Experience  shows  that 
merely  putting  through  one  office  all  the  requisitions  for  a 
group  of  units  will  effect  huge  economies  by  giving  all  the 
branches  the  benefit  of  the  best  purchasing  experience  in  the 
group.  For  instance.  Superintendent  A  Is  a  good  buyer  of 
canned  goods.  Superintendent  B  is  a  good  buyer  of  clothing, 
and  Superintendent  C  Is  a  good  buyer  of  engine  room  sup- 
plies. By  combining  the  purchases,  the  three  Institutions  get 
the  benefit  of  the  best  buying  experience  In  the  three  lines. 
The  tabulation  of  the  prices  paid  by  different  branches  of  the 
same  corporation  will  often  show  variations  of  over  300  per- 
cent. One  of  the  leading  industrial  engineers  of  the  country 
recently  reported  that  the  colleges  of  the  country  could  save 
$100,000  per  year  by  standardizing  their  purchases  of 
stationery  alone. 


PROGRESS  IN  COOPERATIVE  BUYING      263 

"May  I  cite  a  few  specific  examples  of  the  benefit  of  cen- 
tralized buying: 

I.  Seven  years  ago  we  found  that  by  changing  the 
specifications  on  tennis  nets,  the  life  of  the  nets  would 
be  doubled,  and  the  cost  reduced  from  %2G  a  dozen 
to  $16.50  a  dozen.  This  reduced  the  cost  more  than 
75  percent. 

II.  For  six  years  two  office  buildings  used  a  disin- 
fecting spray  costing  $1.25  per  gallon  or  $62.50  per 
barrel.  Upon  analysis  it  proved  to  be  formaline,  per- 
fume, and  Lake  Michigan,  costing  the  dealer  47  cents 
per  barrel. 

III.  Another  janitor  supply  costing  $1.25  per 
gallon  could  be  produced  for  $2  per  barrel. 

IV.  I  venture  to  say  that  some  of  the  institutions 
here  represented  are  today  buying  liquid  soap  for  a 
dollar  or  more  per  gallon,  while  the  Y.  M.  C.  A. 
College  makes  a  better  soap  for  1 1  cents  per  gallon. 

V.  Boiler  compound  is  variously  priced  from  1  ]/> 
cents  to  35  cents  per  pound,  and  is  used  in  Chicago  in 
huge  quantities,  but  the  Bureau  of  Standards  experts 
report  that  no  compound  is  needed  for  Chicago  water. 

VI.  The  Federal  Trade  Board  recently  issued  an 
order  against  seven  varnish  houses,  because  of  com- 
mercial bribery.  Five  of  these  varnish  houses  are  lo- 
cated in  Chicago,  and  at  least  two  of  them  still  enjoy 
a  large  institutional  business. 

VII.  Within  the  last  few  months  I  have  seen 
requisitions  for  an  expensive  cleaning  material  which 
analyzed  92  percent,  water  and  3  percent,  silica — or 
sand. 

VIII.  Sweeping  compound  is  a  large  item  of  ex- 
pense in  many  institutions,  but  sawdust  and  water  will 
do  the  job  as  well  at  a  fraction  of  the  cost. 

IX.  A  slight  change  in  the  car  numbers  of  the  Pull- 
man Car  Co.  reduced  the  annual  charge  from  $1,800 
to  $75. 

X.  The  cost  of  drugs,  food  stuffs,  and  clothing  may 
be  greatly  reduced  by  the  intelligent  application  of  the 
best  purchase-information.  No  one  superintendent 
has  the  time  to  find  for  every  purpose  the  product 


264     PURCHASING  PRINCIPLES  AND  PRACTICES 

which  will  result  in  the  greatest  ultimate  economy,  and 
even  if  he  did,  why  have  the  same  ground  covered  by 
a  hundred  or  more  individuals,  when  one  could  do  it 
as  well  and  more  scientifically? 

"The  economies  of  cooperative  buying  are  so  great  and  so 
evident  that  it  must  come.  The  only  question  is,  are  you 
ready  for  the  step? 

Where  Waste  Creeps  in. — "The  administration  of  these 
institutions  involves  a  business  of  considerable  magnitude. 
You  have  protected  yourselves  against  loss  by  fire,  theft,  and 
misappropriation  of  funds;  but  in  many  cases  the  ultimate 
expenditure  of  many  thousands  of  dollars  is  directed  by 
janitors,  engineers,  and  housekeepers,  whose  only  method  of 
selection  is  the  costly  cut  and  try  method. 

"I  venture  to  assert  that  a  study  of  your  kitchen  supplies 
will  show  dozens  of  different  kinds  of  baking  powder;  a  sur- 
vey of  your  paint  shops  will  disclose  dozens  of  different 
kinds  of  varnishes  and  paints  to  be  used  for  the  same  purpose. 
Among  all  these  different  brands  surely  one  can  be  found 
that  really  gives  the  greatest  value  for  your  dollar. 

"Comparatively  few  individuals  can  afford  to  give  $100,- 
000  to  educational  institutions,  but  even  $100,000  is  soon 
spent.  The  proposed  cooperative  plan  will  soon  save  a  mil- 
lion dollars,  and  will  then  continue  to  return  other  millions 
throughout    the    years    to   come. 

"Let  us  establish  a  central  purchasing  bureau  whose  duty  it 
shall  be  to  find  that  most  efficient  product  and  secure  it  for  all 
the  institutions,  at  the  least  possible  expenditure  of  time, 
effort  and  dollars." 

Action  on  This  Report. — Dr.  R.  L.  Kelly,  who  was  at  that 
time  the  executive  secretary,  appointed  a  special  committee  to 
study  the  possibilities  of  cooperative  purchasing  for  the  more 
than  six  hundred  smaller  educational  institutions  that  were 
members  of  the  Association  of  American  Colleges. 

The  committee  consisted  of:  Dr.  Donald  J.  Cowling,  presi- 
dent of  Carleton  College;  John  C.  Dinsmore,  purchasing 
agent,  University  of  Chicago;  Dr.  Kelly  and  B.  Warren 
Brown,  his  assistant. 

As  the  purchases  of  these  institutions  covered  a  wide  variety 
of  materials,  we  decided  to  confine  our  first  efforts  to  the 
various  kinds  of  paper  products  and  certain  janitor's  supplies. 


PROGRESS  IN  COOPERATIVE  BUYING      265 

A  questionnaire  covering  these  few  items  was  sent  to  all  the 
members  of  the  Association  of  American  Colleges. 

No  Uniformity  in  Materials. — The  replies  to  this  ques- 
tionnaire were  received  and  tabulated  at  the  offices  of  the 
Association  of  American  Colleges.  It  was  at  once  apparent, 
however,  that  we  must  farther  reduce  our  first  list  of  items, 
if  we  were  to  make  any  headway.  It  was  not  possible  to  make 
up  anything  more  than  a  list  of  the  materials  covered  by  the 
questionnaire,  because  there  were  no  two  colleges  that  used 
the  same  materials.  We  then  sent  out  a  second  request,  for 
data  and  samples  of  the  various  kinds  of  envelopes,  letter- 
heads, examination  books,  and  theme  tablets  used. 

When  this  data  was  received,  we  first  examined  all  the 
samples  of  envelopes  submitted.  While  there  was  a  wide 
variance  in  the  prices,  qualities  and  quantities  used,  they 
could  be  classified  roughly  as  bonds,  bondines,  and  govern- 
ment envelopes.  A  careful  study  of  the  qualities  and  prices 
showed  that  we  could  purchase  for  them  bond  envelopes 
much  better  in  quality  than  the  average,  and  nearly  as  good 
as  the  best  used,  and  that  we  could  have  them  printed  and 
delivered  for  considerably  less  than  they  were  then  paying. 
We  then  sent  out  a  sample  of  an  envelope  we  could  purchase 
at  a  right  price,  and  asked  them  to  forward  their  orders  to 
the  office,  where  they  were  to  be  pooled  and  sent  to  the 
envelope  mill. 

We  proceeded  in  the  same  manner  with  other  stationery 
supplies.  As  a  result  of  this  offer,  we  secured  orders  for  en- 
velopes from  86  colleges  in  28  States.  The  net  result  of  these 
experiments  was  that  the  committee  saved  these  colleges  some- 
thing more  than  $1,960  on  purchases  aggregating  $5,300.  In 
other  words,  the  committee  saved  the  colleges  of  the  country 
38  percent,  on  the  purchase  price,  or  a  little  more  than  one 
hundred  dollars  for  every  hour  they  served. 

Proof  That  the  Plan  Would  Work. — This  work  was  all 
done  by  a  voluntary  committee,  which  had  carried  it  on  at 
considerable  cost  in  time  and  effort,  merely  to  demonstrate 
the  possibilities  of  cooperative  purchasing.  We  felt  that  since 
the  feasibility  of  this  plan  had  been  demonstrated,  the  colleges 
should  assess  themselves  in  order  to  continue  and  expand  this 
work  which  was  no  longer  an  experiment.  We  called  a  meet- 
ing of  the  representatives  of  the  Association  of  American  Col- 
leges at  Lake  Geneva  in  the  Summer  of  1918   (July  23-25), 


266     PURCHASING  PRINCIPLES  AND  PRACTICES 

to  consider  setting  up  a  permanent  central  purchasing  office. 

Plan  for  Cooperative  Buying. — The  following  report  was 
then  submitted: 

"We  have  met  here  in  order  to  accomplish  three  things. 
We  want  to  become  better  acquainted,  to  point  out  some  of 
the  conditions  which  have  developed  in  the  purchase  of  edu- 
cational supplies,  and  to  try  to  discover  a  remedy  for  these 
conditions. 

"It  is  manifestly  impossible  for  us  all  to  analyze  and  try 
out  every  product  which  is  offered  us.  It  is  impossible  for 
each  one  of  us  to  make  the  best  possible  purchase  of  every 
material  we  buy  when  they  number  tens  of  thousands  an- 
nually. It  is  possible,  however,  for  us  to  provide  the  machin- 
ery to  do  this  work  for  us.  In  other  words,  while  it  is  im- 
possible for  you  to  consult  each  one  of  us  when  you  have  an 
important  purchase  to  make,  it  is  passible  for  you  to  have 
that  data  collected  and  made  instantly  available. 

"Why  should  I .  spend  time  and  energy  investigating  a 
cleaning  powder  that  the  buyer  for  Minnesota  has  already 
analyzed,  and  found  valueless? 

"Why  should  you  continue  to  pay  a  dollar  a  gallon  for 
liquid  soap  when  I  can  make  a  better  soap  for  36  cents? 

"Why  should  one  of  us  get  into  difficulties  with  the  In- 
ternal Revenue  Department,  when  half  of  our  neighbours  had 
learned  of  the  new  narcotic  regulations? 

"The  time  is  not  so  long  past  when  the  business  manage- 
ment of  educational  institutions  was  proverbially  poor.  We 
are  entering  upon  a  period  of  efficient  management  of  educa- 
tional Institutions,  at  a  time  when  cooperation  and  standard- 
ization are  not  only  possible,  but  a  vital  necessity. 

To  Build  the  Machine  Needed. — "To  cooperate  efficiently 
it  Is,  of  course,  necessary  to  build  up  some  sort  of  machine  to 
handle  the  work.  We  are  here  to  consider  and  determine  upon 
the  kind  of  machine  best  suited  to  our  needs.  There  are  three 
possible  ways  of  doing  this,  assuming  that  there  are  100 
Institutions  that  would  be  Immediately  interested  in  the 
project. 

I — We  can  build  up  an  organization  under  the  direc- 
tion of  an  expert  who  will  visit  each  Institution,  make 
a  detailed  report  on  the  materials  purchased,  prices 
paid,  system  of  purchases,  use  to  which  materials  are 
put,  and  recommend  changes.      We  can  provide  him 


PROGRESS  IN  COOPERATIVE   BUYING      267 

with  the  machinery  to  tabulate  this  experience  and 
make  It  Instantly  available  for  the  other  members  of 
the  group.  Through  him,  each  one  of  you  could  visit 
every  one  of  your  neighbours,  and  secure  the  benefit  of 
his  experience,  while  still  carrying  on  your  regular 
duties.  This  would  cost  each  Institution  about  three 
hundred  dollars  per  year, 

II — We  can  employ  a  practical  purchasing  agent 
who  Is  familiar  with  university  and  college  purchases, 
give  him  a  clerk  and  an  office  boy,  and  ask  him  so 
many  questions  and  demand  so  much  information  that 
in  self-defense  he  will  have  to  dig  and  become  an  ex- 
pert. This  will  cost  each  one  of  us  a  hundred  dollars 
a  year. 

Ill — We  can  drop  the  whole  project  and  continue  to 
muddle  through." 

War  Conditions  Prevented  Action. — Without  exception, 
the  delegates  were  interested,  but  conditions  were  so  unsettled 
that  it  was  considered  Inadvisable  to  take  any  farther  action  at 
that  time.  Because  of  the  war,  and  the  extra  burdens  it  im- 
posed upon  the  committee,  it  was  not  possible  to  carry  on  the 
experiment,    and   nothing   further  was   accomplished. 

There  is  a  very  fertile  field  here,  however,  and  I  feel  con- 
fident that  some  sort  of  cooperative  purchasing  office  for  col- 
leges will  be  set  up  sometime  in  the  future. 

The  careful  administration  of  a  central  purchase  bureau 
for  colleges  would  effect  savings  of  at  least  $500,000  per  year, 
or  an  amount  equivalent  to  the  income  from  an  endowment  of 
$10,000,000.  To  establish  this  work  permanently,  however, 
requires  a  man  with  vision  and  unlimited  patience,  together 
with  a  long  and  intimate  acquaintance  with  the  "faculty  type 
of  mind."  He  should  also  have  an  Income  of  his  own,  or  the 
equivalent,  in  the  form  of  an  endowment  from  the  more 
wealthy  friends  of  education. 

A  full  report  of  the  work  actually  accomplished  by  this  com- 
mittee may  be  found  in  the  Bulletins  of  the  Association  of 
American  Colleges,  Volumes  IV  and  V. 

Social  Agencies  Become  Interested. — The  second,  and  at 
first,  the  more  promising  little  journey  In  cooperative  buy- 
ing, was  made  by  the  Central  Council  of  Social  Agencies. 
About  the  time  that  the  Association  of  American  Colleges 


268     PURCHASING  PRINCIPLES  AND  PRACTICES 

decided  to  let  the  project  sleep  until  after  the  war,  the  Cen- 
tral Council  of  Social  Agencies,  a  voluntary  association  of  the 
various  eleemosynary  agencies  and  institutions  in  Chicago, 
formed  a  committee  on  purchases. 

At  the  first  meeting  of  the  executive  committee,  the  follow- 
ing brief  statement  of  the  possibilities  of  cooperative  pur- 
chasing was  read: 

I  have  not  attended  any  of  yolar  previous  meetings  but  I  assume  that  at 
least  some  time  has  been  devoted  to  the  discussion  of  ways  and  means  of 
raising  more  funds  for  the  purpose  of  continuing  and  expanding  your  great 
work,  which  means  so  much  to  the  welfare  of  the  next  generation.  In  my 
estimation,  there  is  just  one  thing  finer  than  securing  new  funds,  and  that  is 
to  make  the  funds  you  now  have  work  harder  and  more  efficiently.  I  can- 
not tell  you  how  the  buying  power  of  your  dollar  may  be  increased  25  per- 
cent., but  I  can  tell  you  how  this  has  been  done  in  several  other  allied  groups. 

The  report  of  the  Purchasing  Department  of  the  State  of  California,  dated 
November  1,  1918,  shows  a  saving  of  52.86  percent,  over  the  cost  of  previous 
years  for  a  selected  group  of  institutions,  and  a  saving  of  more  than  25  percent, 
on  the  total  supply  expenditures  for  all  State  institutions,  including  building 
operations. 

The  Association  of  American  Colleges  in  1917  and  1918  conducted  an  ex- 
periment in  centralized  buying  which  saved  the  twenty-six  colleges  involved 
more  than  38  percent,  on  the  purchases  made.  The  various  charitable  organ- 
isations in  Chicago  each  year  spend  more  than  a  million  dollars  for  supplies, 
and  the  greater  part  of  this  money  is  spent  under  the  individualistic  form 
of  purchase.  \ 

In  one  rather  large  institution  they  have  carried  purchasing  inefficiency  to  the 
«th  power.  Here  they  have  a  series  of  purchasing  committees,  each  serving 
for  a  few  weeks  only,  so  that  by  no  possible  combination  of  circumstances  may 
future  purchases  be  determined  by  past  experiences. 

This  type  of  purchasing  arrangement  has  other  disadvantages.  Each  com- 
mittee tries  to  outdo  every  other  committee,  and  each  covers  about  the  same 
ground,  with  the  result  that  the  sales  people  are  worn  out  and  feel  like  tak- 
ing to  the  tall  timber  whenever  they  see  a  committee  headed  their  way.  The 
net  result  is  that,  all  things  else  being  equal,  they  pay  the  highest  possible 
prices  for  the  poorest  quality  goods. 

In  ordinary  times  the  salesman  saves  his  special  bargains  for  the  buyer 
who  will  be  in  a  position  to  place  future  business  with  him,  and  the  present 
shortage  of  goods  merely  serves  to  emphasize  this  custom.  Under  these  con- 
ditions the  transient  purchasing  committee  has  little  chance  to  make  a  good 
purchase. 

Can  you  consistently  ask  for  more  and  larger  contributions  when  you  have 
not  expended  past  contributions  in  the  most  advantageous  manner? 

Knowing  as  you  do,  that  each  year  many  small  lives  are  lost  because  of 
malnutrition,  can  you  go  calmly  about  the  unscientific  expenditure  of  the 
funds  contributed   for   the   purchase   of   milk? 

Can  you  refuse  milk  to  the  hungry  little  ones,  when  you  have  wasted  the 
funds  given  for  the  purchase  of  that  commodity? 

The  Central  Council  of  Social  Agencies  then  authorized 
the  committee  to  send  out  a  questionnaire,  the  results  of  which 
are  included  in  the  following  tabulation : 


^                                     ^                                 w 

PRELIMINARY  QUESTIONNAIRE  ON  PURCHASING     -    CHICAGO  COUNCIL   OF   SOCIAL  AGENCIES 

ORGANIZATION 

LIQUID     TOILET     SOAP 

SWEEPING  COMPOUND 

B.AKING   POWDER 

DISINFECTANTS 

BOILER   COMPOUND 

;                   MILK 

VARNISH 

COAL 

%  OF  TOTAL 
PURCHASES 
DISCOUNTED 

Kind          Quantity            Price 

Kind        Quantity             Price  cwt. 

Kind         Quantity          Price 

Kind                    Quantity         P„o 

Kind         Quantity       Price 

Quantity  per  Year.        Price 

Kind        Quantity      Price 
per  Year 

Grade                    Quantity     Where  From          Price 

Anti-Cruelty  Society 

none 

none 

none 

Sancho  6  Special             100  gal.  81.25  gal 

none 

.one 

none 

Lump                                     30  T.    Ind.                         86.10 

none 

Association  House 

Sopozon                     1  gal.     21.35  gal. 

Peralin.  No-mor^dust         3  bbl.  83.00 
(Nov.  make  their  o«n) 

Rumford's           18  lbs.     8.20  lb. 

Coronoleum 

I.OOO  gal.        8.44-.48  gal. 

Floor            12  gal.  81.10  gal. 

287  T.    FranUinCo.    85.75-5.95 

About  2% 

Bculah    Home    and    iVIaternity 
Hospiial 

Rumford-s                           donated 

Coronoleum                  25  gal.  845.00  bb 

10  tjts.  per  day        donated 

Lump                                    100  T.    111.                           86.25 

Fully  66% 

Chicago  Boy's  Club 

none 

Sweeping  Compound 
Co                               100  lb.     8?.00 

Not  standardiied 

120  gal.                  8.30  gal. 
(From  farm  near  camp) 

Odd  kinds     12  gal. 

Lump                                   108  T.    111.                           82.10 

"% 

Chicago'Commons 

none 

Very  litde  used 

Royal  or 

Price's            20  lbs.         8.45  lb. 

West  Disinfecting  Co.  contract 

none 

960  gal.                8.S2  gal. 

American        2  gal.  83.00 

Anthracite.  Buckwheat       225  T.                             88.50-9.50 

10%  on  retail 

Chicago  Foundlings'  Home 

none 

none 

Rumford's 

Sanitas                            20  gal.     S1.6S  ga 

none 

3.000  gal.               8.42  gal. 

Very  little  used 

Mine  Run                                          111..  Ind..  Md.          '6:S0 
3.75 

Wholesale  price 
on  75?„ 

Chicago  Hebrew  Institute 

Commercial         300  gal.     gl.OO  gal. 

Own  manufacture         700  Ibi.  81.50 

none 

West                             50  gal.     S.6Sgal. 

Soda           350         $.03yi  lb. 

8.736  gal.               8.40  gal. 

none 

Screenings                             1.200  T.    III.                              85.20 

65% 

Chicago  Maternity  Hospital  and 
Training  School 

Sopoion                   4  gal.     88.00 

Have  not  purchased  for  two  years. 

Tablets                         3  gal.  82.S0 

Landlord  supplies  it 

900  gal.               8.S0  gal. 

Landlord  supplies 

Very  small 

Chicago  Mills  Hotel 

none 

none 

none 

"KK"                      50-60  gal.     8I.2S  ga 

none 

none 

none 

1  No  records 

Chicago     Nursery     and     Half 
Orphan  Asylum 

none 

none 

Calumet           60  lbs.       8.20-8% 

Coronoleum                    34  gal.     81.50  ga 

Famous       528           8.06'^s 

9,883  gal.        8.24-.46  gal. 

none  in  1918 

'  Not  No.  3                                          III.                   84.50-4.25 

None  up  to  present 

Children's  Memorial  Hospital 

Make  Their  0»n 

Depends  on  kind  and 
market  price. 

Pocahontus  Mine  Ron                                                     J7.2S 

Christopher  House 

Not  used 

none 

None  used 

Egg                                      125  T.    111.                      84.(0  (f) 

City  ofChicagt^Dept.  of 
Health 

none 

none 

Rumford's      100  lbs.       8.25  lb. 

Disinfection  candles    ISOOcu.ft.    8.16?3 
Quantity  varies       4000  cu.ft.      .40 

none 

4.000  gal.                8.30  gal. 

none 

Various                         600-800  T.                         8S.S0-I1.S0 

Handled    by    City 
Controller 

Edwards  Sani  tori  urn 

none 

Use  moist  sawdust 

"Sunny"         120  lbs.       8.15  lb. 
B.  A.  Railton  Co. 

Fumidine                      1  gross    818.00  g 
Formaldehyde             1000  ft.  size 

none 

10.368  gal.                8.35  gal. 

Soft,  small  egg  and  nut                     111.                            8.21 
Anthracite,     small     egg. 

range  and  chestnut            34ST.    Ind      F.O.B.  Napietville 

Eli  Bates  House 

Savole                    IS  gal.     81.80 

Sweepine                        200  lbs.     81.50 

Edelweiss        12  lbs. 

Chloro-Napholeum        10  gal.     81.75  ga 

none 

1.200  gal.                8.48  gal. 

Pocahontus                            90  T.    Va.                           87.25 

Elizabeth  McCormick  Fund 

none 

none 

Ryzon                6  lbs.       8.26  lb. 

none 

none 

1.442  gal.               8.42  gal. 

none 

none 

so% 

Englewood  Hospital 

Make  their  own 

"-' 

Bought  in  quantities  and  solution  made  u 

none 

10.000  gal.                 market 

10  gal.     varies 

Pocahontus                                        Frankhn  Co.    market 
price 

On  all  eacept  coal 
and  milk 

Elizabeth  Muriel  Day  Nursery 
Fdlowship  House 

300  lbs. 

West  &  Co.                    2  gal.     81.75  ga 

700  gal.               8.96  gal. 

2  gal.  83.2S 

100  T.    111.                           83.60 

90% 

Perrolin                                            donated 
(Now  make  own— sawdust  and  oil) 

Rumford            15  lbs.       8.301b. 

Soap  powders        30-10  pkgs.     8.4S  pkg 

300  gal.               8.56  gal. 

Lump,  soft                             28  T.    III. 

Anthracite                          5-10  T.    Penn.             6.25-12.0O 

Only  at  Loop  De- 

Gad's  HiU 

none 

Use  vacutm  cleaner 

Mine  Run                             144  T.    III.                           84.75 

Girli'  Friendly  Society  Lodge 

none 

Me 

Victor              60  lbs.       8.19  lb. 

Saniflush                     1441  bs.     82.2S  pe 
Case  of  24  cans,  net  weight,  24  oz. 

750  gal.               8.48  gal. 

none 

Pocahontus  Mine  Run           ISO  T.    W.  Va.                       87.S0 

On  dry  goods,  hard- 
ware and  staples 

Henry  Booth  House 

Use  sawdusi  and  water 

Royal                 6  lbs.         8.60  lb. 
Rumford                            8.40  lb. 

Lysol 

36Sgal.market-8.40gaI. 

About  S  gal. 

SmaUegg 
Cokr  ^' 

!Iyi,ic  for  Aged   and   Disailed 
R.R.  Men  of  America 

none 

none 

Price's            180  lbs.         8.S8  lb. 

Chemo.                         70  gal.    81.50  gal 

none 

S.llOgal.               8.36  gal. 

All  work  contract 

Mine  Run                             350  T.    Ind,                          84.9S 

none 

[         yi.  Children's  Home  and  Aid 

none 

•one 

2.915  gal.        S.40-.46  gal. 

Majestic  Egg                        169  T.    111.              82.65  at  mine 

Jewish  Training  School 

none 

.one 

none 

Soap.  lye.  soda  and  water 

none 

S  qts.  per  day    market 

Small  quantities 

Lump                                   20OT.    111.                           86.50 

Practically  none 

I«C0ln  State  School  and  Colony 

none 

Midland                         300  lbs.     81.725 

Royal.  Pri;e  1800  lbs.     8.363 

Varies 

Perolin      2S0O  lbs.     8.10  lb. 

IS.SOO  gal.               8.30  gal. 
(have  60  cows  in  addition) 

Various  kinds 

Screenings                          12,000  T.    Lincoln.  111.     82.25-2.90 
Mine  Run                          1.000  T. 

Less  than  5% 

Mary  Crane  Nursery 

not  used 

Sawdust 

20  bbl.    81.75  bbl. 

Royal                 12  lbs.     donated 

Cresol                             2  gal.     82.00  ga 

none 

2.000  gal.  average  8.42  gal. 

Heat  from  Hull  House 

60% 

Mary  Dawes  Hotel 

none 

Sawdust 

Paines              120  lbs.     8.14 

none 

none 

3.000  gal.               8.44 

none 

Soft  egg                                250  T.    III.                           86.2S 

s% 

Methodist  Deaconess  Orphanage 

Thornward        60  lbs.     8.20 

5.824                     8.32 
819     certified     8.60 
8  gal.  per  day  donated 

Soft  lump                             500  T.    III.                           85.90 

Nearly  all 

Michael  Reese  Hospital 

Prepared  from  soft  soap 

1100  gal.     8.08  gal. 

Sawdust                           SO  bbl.    S.SObbl. 

Calumet             bO  lbs.       8.20  lb. 

Comax                          50  gal.     81.50  ga 

Dearborn          2  bbl.  S.OSS  lb. 

45.000  gal.               8.38  gal. 

Twin  City  100  gal.  82.25  gal. 
and  others 

No.  2  Screenings                ll.OOOT.     Central  III.                85.25 

90% 

North  Ave.  Day  Nursery 

none 

Royal                                 8.45  lb. 

Lysol.  Chloride  of  Lime 

1.278  gal.  market  less  10% 

Northwestern  University 
Settlement 

Antisepial              15  gal.     81.15  gal. 

Imperial  Mfg.  Co.      i    1000  lbs.   82.15  cwt. 
(250  lb.  bbl.  at  M.k) 

Royal                 20  lbs.       S.4S  lb. 

Sanoform                         10  gal. 
Hydro-clean                    5  gal.       81.60  ga 

625  gal.  milt 

8.S2  less  10% 
200  gal.  cream 

82.40  less  10% 

Small  amounts 

Pocahontus  Mine  Run           ISOT.     Franklin  Co.    83.50-9.00 

Olivet  Institute 

none 

Sawdust  and  water 

Victor               100  lbs.     8.192  lb. 

West  Disinfecting  Co.  5  gal.       81.75 

none 

I.SOOgal.              8.2Sgal. 
(at  summer  camp) 

none 

400-500  T,    Frankhn  Co.            82.98 
F.O.B.  Mine 

None— Generally 
Take  4  or  5  mo. 
credit. 

Providence  Day  Nursery 

none 

West  Disinfecting  Co.      100  1b.     82.25 

K.C.                     5  lb..       8.15  lb. 

Coronoleum                  5  gal. 

none 

1.938  gal.              8.38  gal. 

Furnished  by  decorators 

Franklin  Co.  No.  2                  66  T.    Soft                            86.14 
ISJiT.    Hard                        10.23 

Rufus  Dawes  Hotel 

none 

Sawdust 

none 

none 

none 

350  gal.                8.44  gal. 

none 

Soft  Egg                               150  T.    111.                           86.25 

About  S% 

State  of  Illinois  Dept.  of 
Purchases  and  Supplies 

none 

nt^e 

Exccllo  and      240  lbs.      ^50  lb. 
others 

Chloride  of  lime         1200  lbs.     8.074 

none 

36.000  gal.               8.28  gal. 

Fairiy  good 
quality    100  gal.  81.40 

Screenings  No.  2                12.000  T.    Peoria  and                83.37 
Springfield 

Very  small 

St.  Elizabeih  Day  Nursery 

none 

nt^e 

X  lb.  month 

I  lb.  month 

none 

1.200  qt.. 

none 

24  T. 

United  Charities  of  Chicago 

19.000  gal.              8.50  gal. 

Soft                                   1.200  T.                                   87.00 

100  gal.  81.00  gal. 

ncfe 

none 

Chemo  Products  Co.. 
Buffalo.  N.Y.           SO  gal.     81.25 

none 

750  gal.              8.32  gal. 

Very  little  used 

Mine  Run                                200  T.     Franklin  Co.             86.35 

Soap  and  disinfect- 
ant only 

BeauBrummel         1  gal.     82.75  gal. 

nd>e 

Edelweiss           60  lbs.       8.19 

Coronoleum                  34  gal.     81.2S 

99  1b..       S.I2 

11.348  gal.            8.38Kgal. 

Mine  Run.  5  Nut                 1.216  T.                                       85.51  || 

IXX  None  Such    «00  lbs.   83.50 
84.00 

XXXX              70  lbs.       8.19 

Coronoleum                  40  gal.     81.2S 

none 

7.300  gal.              8.40  gal. 

1 

Not                                          SOO  T.     Franklin  Co.             84.00 

Calumet           154  lbs.       8.IS 

Formaldehyde            600  lbs.       8.17 

20.000  gal.               8.36  gal. 

1 

,^  1^ 


High 

Average 

.12  lb. 

$  .08  lb. 

.96  gal. 

Al'A  gal, 

3.2S  gal. 

2.20  gal. 

PROGRESS  IN  COOPERATIVE  BUYING      269 

Purchasing  Data  Summarized. — This  blue  print  was  sub- 
mitted to  the  committee  together  with  the  following  report: 

In  December,  1918,  the  possible  savings  to  be  effected  through  coordinating 
the  purchases  of  the  various  social  agencies  was  brought  to  your  attention. 
The  Central  Council  of  Social  Agencies  then  authorized  the  committee  on 
centralized  purchasing  to  collect  data,  and  make  specific  recommendations.  In 
accordance  with  that  authorization,  a  questionnaire  was  sent  out  covering 
eight  items  of  common  use  by  the  agencies.  The  result  of  this  questionnaire 
may  be  summarized   as  follows: 

The  cost  of  liquid  toilet  soap  varitd  from  8  cents  a  gallon  to  $2.75  a 
gallon,  the  average  price  per  gallon  being  $1.39.  Sweeping  compound  varied 
from  $1.50  to  $7.80  per  cwt.,  average  $2.74.  Baking  powder  ranged  from 
14  cents  per  pound  to  $1  per  pound,  average  32  cents  per  pound.  Disinfec- 
tants ranged  from  65  cents  per  gallon  to  $2.50,  average  $1.55  per  gallon. 
"Other  items  were  reported  to  be   as   follows: 

Low 

Boiler  Compound  $  .03  J^  lb. 

Milk  .24  gal. 

Varnish  1.10  gal. 

Coal  Data  insufficient  for  accurate  comparison. 

The  above  data  show  fluctuations  in  unit  cost  of  more  than  3,000  percent. 
It  may  be  that  a  good  liquid  toilet  soap  cannot  be  produced  for  8  cents  per 
gallon,  but  it  should  not  cost  $2.75  per  gallon.  Somewhere  in  between  these 
extremes  a  good  soap  should  be  secured.  If  an  8  cent  soap  is  good  enough 
for  Charity  A,  Charity  B  can  hardly  justify  the  expenditure  of  $2.75  for  soap 
for  the   same   purpose. 

The  cost  of  sweeping  compounds  did  not  vary  so  widely,  but  with  saw- 
dust selling  at  $7.00  per  ton,  the  price  of  $7.00  per  cwt.  seems  a  bit  high. 
Some  of  the  items  listed  as  disinfectants  were  sold  for  more  than  twenty 
times  the  cost  of  production.  Boiler  compound  was  used  by  comparatively  few 
of  the  agencies,  but  showed  a  variation  of  more  than   300  percent,  in  cost. 

The  most  interesting  facts  were,  however,  brought  out  in  connection  with 
the  purchase  of  milk.  The  summary  of  milk  purchases  shows  the  lowest 
cost  per  gallon  to  be  24  cents  and  the  highest  cost  96  cents.  It  is  possible  that 
the  96  cents  pric^  was  paid  for  certified  milk,  and  that  it  was  delivered  in 
small  lots  over  a  widely  scattered  district;  but  these  facts  are  not  shown  on 
the  reports,  and  I  find  that  another  institution  doing  apparently  similar  work, 
secured  certified  milk  for  60  cents  a  gallon.  In  any  case  the  difference  in 
price  paid  was   rather  wide. 

In  this  connection  it  is  interesting  to  note  that  the  "Chicago  Tribune,"  of 
July  26,  published  a  statement  that  Cook  County  was  paying  32  cents  per 
gallon  for  milk,  and  the  city  of  Chicago  paid  35  cents. 

In  making  price  comparisons  it  is  of  prime  importance  that  we  keep  in 
mind  the  factors  of  quantity  purchases,  economical  delivery  units,  and  prompt 
payment  of  bills,  any  one  of  which  may  have  a  marked  effect  upon  unit  costs. 

May  I  suggest  to  your  committee  that  the  price  paid  for  milk,  which  is 
one  of  your   largest  items  of  expense,  is  in   many  cases   apparently  too  high? 

May  I  also  suggest  that  because  of  present  conditions  in  the  distribution  of 
milk,  the  milk  dealers  would,  I  believe,  be  most  willing  to  make  a  special  rate 
on  milk  for  charitable  institutions  by  joint  action  of  the  local  organization  of 
retail   milk   dealers? 


270     PURCHASING  PRINCIPLES  AND  PRACTICES 

If  the  facts  were  laid  before  them,  I  do  not  believe  that  the  men  who  are 
responsible  for  the  distribution  of  milk  to  the  infants  of  the  poor  in  this 
great  city  would  take  a  purely  commercial  view  of  their  part  in  the  work. 
Once  you  have  brought  under  control  the  cost  of  milk,  it  will  be  easy  to 
attack    other    problems. 

Again,  Failure  to  Act. — Here  again  the  committee  was  sold 
on  the  project,  but  there  were  no  funds  to  employ  the  neces- 
sary clerical  force  to  carry  it  through  and  again  the  voluntary 
committee  did  not  feel  that  they  could  carry  the  burden  in- 
definitely. The  project  was,  therefore,  permitted  to  sleep. 
Before  the  committee  was  finally  relieved  of  its  duties,  how- 
ever, the  author  was  asked  to  prove  his  statement  that  there 
was  not  a  hospital  or  other  eleemosynary  institution  in  Chicago 
belonging  to  the  Central  Council  of  Social  Agencies  that 
would  not  profit  by  a  central  purchasing  bureau.  The  chair- 
man of  the  general  committee  selected  one  of  the  largest  and 
best  managed  institutions  in  Chicago,  and  asked  the  author  to 
give  some  concrete  illustrations  of  the  way,  or  ways,  in  which 
that  particular  institution  might  profit  through  a  central  pur- 
chasing committee. 

We  investigated  the  purchase  records  of  the  institution  se- 
lected for  one  month  only,  and  found  enough  material  to  more 
than  prove  our  contention  that  the  mere  bringing  together  of 
the  purchases  of  any  large  group  of  units  that  had  previously 
handled  their  purchases  separately,  would,  of  necessity,  ef- 
fect a  considerable  saving. 

In  this  hospital  we  found  that  the  majority  of  the  meats 
used  were  purchased  at  a  premium  of  more  than  five  percent, 
over  the  market,  and  we  also  found  that  the  laundry  was 
using  a  washing  compound  sold  under  a  fancy  name,  for  which 
they  had  paid  more  than  five  times  the  market  price. 

Saving  Through  Cooperation  Estimated. — May  I  repeat 
that  the  mere  bringing  together  of  the  purchases  of  large  num- 
bers of  units  that  have  heretofore  handled  their  purchases 
separately  will  result  in  a  saving  of  not  less  than  ten  percent., 
and  that  this  saving  will  more  often  be  more  nearly  twenty- 
five  percent,  than  ten  percent.  Before  leaving  this  subject, 
let  me  cite  three  additional  concrete  illustrations. 

In  Milwaukee  there  are  two  firms,  both  of  >vhich  use  a 
large  number  of  waggon  wheels.  Both  firms  were  in  the  mar- 
ket at  the  same  time,  and  the  two  purchasing  agents  pooled 
their  orders,  and  effected  a  saving  of  fifteen  percent.      Re- 


PROGRESS  IN  COOPERATIVE  BUYING       271 

cently  a  large  number  of  laundries  have  pooled  their  orders 
for  equipment,  and  effected  a  very  considerable  saving. 

For  the  past  six  months  several  large  educational  institu- 
tions have  pooled  their  tax-free  alcohol  purchases  and  have 
materially  reduced  costs.  In  one  instance  the  former  cost  was 
$1.25  per  gallon  and  the  new  pooled  price  45c  per  gallon. 

I  feel  certain  that  sooner  or  later  all  the  various  associa- 
tions, such  as  those  referred  to  above,  will  establish  a  central 
purchase  bureau,  where  they  may  have  many  of  their  pur- 
chases pooled,  and  where  they  may  receive  authoritative  ad- 
vice concerning  the  merit  and  market  price  of  certain  com- 
modities, a  black  and  white  list  if  you  please. 

This  will  remove  much  of  the  guess-work  from  the  pur- 
chases of  the  members  of  these  associations,  and  will  effect 
savings  which  will  total  millions  each  year.  It  is  much  easier 
to  save  a  dollar  than  it  is  to  earn  one,  or  to  secure  additional 
funds  from  the  long-suffering  public. 


Chapter  XXX 

NOSTRUMS  AND  FANCY  NAMES 

High  Prices  for  Wonder  Goods. — The  purchasing  agent 
in  every  line  of  business  each  year  is  importuned  to  purchase 
standard  materials  under  fancy  trade  names  at  vastly  inflated 
prices.  The  buyer  for  the  machine  shop  is  urged  to  purchase 
the  new  and  wonderful  radium  screw-cutting  oil  that  costs 
twice  as  much  as  the  oil  he  is  now  using,  and  is  guaranteed  so 
to  reduce  the  cost  of  operating  the  machines  that  a  huge  net 
saving  for  his  firm  will  result.  The  maintenance  buyer  for  a 
string  of  buildings  is  urged  to  purchase  a  patented  compound 
for  cleaning  out  the  drain  pipes,  or  a  wonderful  new  polish 
that  costs  four  times  as  much  as  the  polish  he  is  now  using, 
but  which  will  effect  a  huge  saving  in  time  and  labour  costs. 

The  buyer  for  a  balcing  firm  is  urged  to  purchase  a  new 
kind  of  baking  powder  that  will  not  only  cause  the  dough  to 
increase  in  size,  but  will,  in  some  mysterious  manner,  cause  it 
to  increase  in  weight.  The  buyer  for  a  string  of  laundries  is 
urged  to  buy  a  new  kind  of  material  that  can  be  used  in  the 
place  of  soap,  with  a  great  saving  in  labour  and  no  detriment 
to  the  clothes.     This  list  could  be  extended  almost  indefinitely. 

Beware  of  Fancy  Names. — There  are,  I  suppose,  some  of 
these  items  on  the  market  which  are  based  upon  new  and 
thoroughly  sound  principles,  but  I  have  never  yet  found  one. 
Without  exception  a  chemical  analysis  has  shown  that  the  so- 
called  new  and  wonderful  product  was  merely  an  old  friend  In 
new  clothes,  and  credited  with  virtues  which  it  did  not  possess. 
The  difficulties  of  the  purchasing  agent  are  often  complicated 
by  the  fact  that  he  does  not  have  ready  access  to  a  reliable 
commercial  laboratory.  All  too  often  the  salesman  has  al- 
ready seen  and  convinced  the  man  in  charge  of  the  operating 
department  that  the  particular  item  he  Is  trying  to  sell  will 
really  do  all  the  wonderful  things  that  he  claims. 

It  is  quite  true  also  that  under  tests  and  demonstrations, 
these  new  and  high  priced  products  will  often  actually  do  the 

272 


NOSTRUMS  AND  FANCY  NAMES  273 

work  at  a  lower  cost  than  the  old  reliable  product  you  have 
been  using. 

This  does  not,  however,  prove  that  the  new  product  is  more 
efficient  or  that  the  old  product  is  less  efficient.  It  merely 
shows  that  the  new  product  is,  for  the  time  being,  used  in  a 
scientific  manner,  and  that  all  too  often  in  actual  practice,  the 
use  of  materials  is  far  from  efficient. 

The  Lubrication  Expert. — In  illustration  of  the  above 
statement,  let  me  cite  a  recent  experiment  in  lubrication.  A 
certain  power  plant  had  been  using  a  certain  brand  of  cylin- 
der oil  for  a  number  of  years,  and  had  found  it  highly  satis- 
factory. The  salesman  for  another  highly  reputable  oil  com- 
pany asked  permission  to  carry  on  some  tests  with  another  oil 
that  would  cost  somewhat  more  per  gallon.  The  salesman 
was  so  sure  his  cylinder  oil  was  much  better  than  the  oil  that 
was  being  used,  that  the  buyer  finally  arranged  to  have  the 
lubrication  engineer  from  this  company  study  the  problem. 
He  studied  the  problem,  delivered  a  long  technical  lecture 
upon  the  theory  and  practice  of  lubrication,  and  in  a  few  days 
presented  charts  showing  the  old  rate  of  consumption  of  the 
old  oil,  and  the  new  rate  of  consumption  of  the  new  oil. 
There  was  undoubtedly  a  saving  of  over  thirty  percent. 

How  the  Saving  Was  Made. — After  the  lubrication  engin- 
eer had  finished  his  report,  and  before  the  salesman  had  been 
given  the  contract,  the  purchasing  agent  went  over  the  matter 
with  the  operating  engineer.  He  found  that  the  oil  feeds  had 
been  so  regulated  that  they  were  delivering  only  a  little  more 
than  half  as  much  oil  as  they  had  delivered  before  the  lubrica- 
tion engineer  adjusted  them.  The  interesting  fact  about  all 
this  is  that  the  engines  were  amply  lubricated  even  then,  and 
that  when  the  old  oil  was  returned  to  the  oil  feed  lines,  and 
the  regulators  were  still  delivering  about  half  the  amount 
they  had  formerly,  the  engines  were  still  adequately  lubricated. 

In  other  words,  they  had  been  wasting  oil  by  feeding  it 
into  the  cylinders  too  fast  and  the  lubrication  engineer  had 
merely  reduced  the  rate  of  feed,  filled  the  oil  tanks  with  his 
new  high-priced  oil  with  the  fancy  name,  and  taken  credit  for 
having  a  much  more  efficient  oil. 

This  is  a  very  good  illustration  of  the  sort  of  service  that  a 
salesman  can  perform  for  the  purchasing  agent.  The  point 
I  wish  to  make  here  is,  however,  that  the  materials  are  very 
often  credited  with  performing  wonders  when  they  are  merely 


274     PURCHASING  PRINCIPLES  AND  PRACTICES 

old  friends  under  new  names,  but  applied  more  accurately  and 
watched  more  carefully  for  the  time  being  at  least. 

Disinfectants. — There  are  so  many  products,  sold  so  ex- 
tensively, and  at  such  unreasonably  high  prices  because  the 
purchasing  agent  has  neither  the  experience  nor  the  means 
of  detecting  these  near  frauds,  that  a  few  more  illustrations 
may  not  be  out  of  place.  If  space  would  permit  me  to  list 
all  of  these  that  have  come  to  my  attention  during  the  last 
ten  years,  I  am  sure  that  the  list  would  be  long  enough  to  in- 
clude at  least  a  few  that  every  purchasing  agent  would 
recognize. 

There  are  several  disinfecting  compounds  on  the  mailcet 
which  are  offered  at  prices  varying  from  $1.50  to  $3  per 
gallon.  These  are,  almost  without  exception,  excellent  disin- 
fectants. As  a  matter  of  fact,  a  good  disinfectant  can  be 
made  so  cheaply  that  it  does  not  pay  to  offer  anything  else. 
The  actual  cost  of  these  disinfectants  ranges  from  $1.50  to 
$5  per  barrel. 

There  is  no  reason  why  these  products  should  be  purchased 
at  the  fancy  prices  when  you  can  make  the  most  efficient  dis- 
infecting spray  by  dissolving  one  pound  of  bleaching  powder 
in  one  gallon  of  cold  water.  This  material  must,  however, 
be  made  up  just  before  it  is  used.  If  you  want  the  disinfectant 
that  is  often  offered  to  you  at  fancy  prices,  use  dilute 
formaline. 

Soap  Pastes  and  Jellies. — Because  a  very  small  amount  of 
either  sal  soda  or  soda  ash  will  cause  a  gallon  of  water  to 
solidify  Into  a  jelly-like  soapy  substance,  there  are  many  soap 
pastes  and  soap  jellies  that  have  very  little  commercial  value. 
Many  of  these  items  that  are  offered  as  high-grade  soap 
products  are  really  made  up  of  more  than  90  percent,  water, 
a  little  soap  and  soda  ash,  and  a  little  fine  sand.  Soda  ash  in 
various  forms  is  offered  to  the  trade  daily  under  fancy  names 
at  prices  ranging  from  three  to  ten  times  its  actual  value.  One 
of  the  most  attractive  forms  is  in  white,  rice-like  grains.  This 
is  sometimes  offered  as  a  by-product  of  the  manufacture  of 
linseed  oil. 


NOSTRUMS  AND  FANCY  NAMES 


275 


SOME   ANALYSES   OF   SAMPLES   OF   SOAP 


Soap    Pastes: 

(1)  White  jelly  soap. 

Sold   as   substitute   for   green   oil   soap. 

(2)  White    paste    soap 


(3)  Automobile   paste  soap 

(4)  Janitors'  soap  paste 

Soap  Substitutes: 

(5)  This  was  guaranteed  to  do  any  work 
that  soap  would  do  and  not  injure 
either  hands  or  clothes. 


(6)  This  product  was  sold  as  a  substi- 
tute for  soap  and  was  supposedly  a 
by-product  of  the  manufacture  of  linseed 
oil.  This  was  marketed  at  IS  cents 
per  lb.  The  actual  value  was  less  than 
3  cents. 


Analysis  Shoius 

Percentages 

92.7 

water 

95.5 

water 

1.5 

sand 

3.0 

soap 

78.7 

moisture 

84.6 

moisture 

69.70  sodium  carbonate 

13.13  moisture 

2.60  sodium  hydrate 

4.79  sodium   chloride 

2.67  sodium  sulphate 

7.11  calcium  &  mag- 
nesium oxide  ext. 


100.00 


Crystalline  sodium  carbonate 
containing  ten  molecules  of 
water. 


Chapter  XXXI 

PRACTICAL  PROBLEMS  FOR  SOLUTION 

Incidents  of  the  Day's  Work. — Experience  shows  the  value 
of  practical  problems  which  may  be  torn  to  pieces  and  ana- 
lyzed at  leisure.  Without  exception,  the  following  problems 
have  been  lifted  bodily  out  of  the  day's  work  of  some  mem- 
ber of  the  National  Association  of  Purchasing  Agents.  Only 
enough  of  the  unimportant  details  have  been  changed  to  pre- 
vent any  possible  embarrassment  to  the  men  concerned.  Most 
of  the  incidents  referred  to  occurred  in  Chicago.  Perhaps  you 
will  recognize  some  as  old  friends.  Because  many  of  these 
problems  are  the  type  that  no  two  purchasing  agents  would 
solve  in  the  same  way,  no  solutions  have  been  offered. 

Hauling  Cinders. — The  unions  had  succeeded  in  getting 
wages  fixed  at  a  high  rate,  and  in  order  to  protect  themselves 
the  Team  Owners'  Association  had  fixed  the  price  for  all 
hauling.  One  of  the  duties  of  the  purchasing  agent  for  a  large 
manufacturing  company  was  to  dispose  of  the  cinders.  They 
had  to  be  loaded  and  hauled  by  trucks  and  teams.  The  rate 
fixed  for  this  service  was  $1.35  per  yard.  When  the  next 
coal  contract  was  made  a  clause  was  added  specifying  that  the 
coal  dealer  remove  the  cinders  at  $.90  per  yard. 

During  the  life  of  this  contract  the  contractor  repeatedly 
complained  about  the  amount  of  money  he  was  losing  on  the 
cinder  contract.  After  the  contract  expired,  and  before  the 
new  contract  was  negotiated,  the  contractor  continued  to  re- 
move cinders  without  any  discussion  of  the  price.  He  sub- 
mitted his  bill  on  the  basis  of  $.90  per  yard. 

Where  the  Contractor  Misleads. — The  same  day  the  bill 
was  submitted,  he  inadvertently  admitted  that  he  had  been 
making  a  profit  of  25c  per  yard  on  all  the  cinders  moved  dur- 
ing the  year.  In  view  of  these  facts,  what  settlement  would 
you  make  with  the  contractor?  You  have  enjoyed  a  fairly  low 
price  during  the  life  of  the  contract.  The  contractor  has  mis- 
led you  concerning  the  profit  he  had  been  making  on  the  con- 
tract, and  his  relationship  with  you  was  one  where  you  could 

276 


PRACTICAL  PROBLEMS  FOR  SOLUTION      277 

rightfully  expect  honesty  and  faithful  performance.  He  has 
hauled  cinders  beyond  the  life  of  his  contract  without 
authorization. 

You  are  employed  to  see  that  your  firm  secures  the  largest 
possible  ultimate  value  for  every  dollar  spent.  What  would 
you  do?     What  method  would  you  pursue?     Why? 

Paper  Towels. — The  market  price  of  a  given  grade  of 
paper  towels  before  the  war  was  $6  per  case.  During  the 
war  the  price  rose  to  $16.50.  Late  in  1920  the  market  began 
to  weaken,  and  the  price  fell  to  $10  and  then  stiffened.  Just 
at  that  time  the  representative  of  a  reliable  mill  came  to  your 
office  with  an  offer  of  $9  per  case,  with  the  rather  unusual 
stipulation  that  if  the  price  should  fall  farther  before  you 
had  consumed  all  the  towels,  he  would  give  you  credit  for 
the  difference.  He  was  crowded  for  room  and  offered  to 
shave  the  price  to  $8.90  if  you  would  take  one  hundred 
cases. 

You  accepted  this  offer,  and  the  market  stiffened  a  bit.  But 
before  you  had  used  more  than  half  the  shipment,  competi- 
tors were  offering  similar  goods  for  $7  per  case.  The  particu- 
lar mill  that  sold  you,  and  two  or  three  other  mills,  did  not, 
however,  follow  the  market  down,  and  technically  the  mar- 
ket for  the  towel  you  bought  had  not  changed. 

What  are  your  duties  and  your  rights?  How  would  you 
proceed  ? 

Tote  Boxes. — The  buyer  for  an  automobile  plant  uses  a 
good  many  heavy  tote  boxes.  The  pre-war  price  was  $12. 
He  was  in  the  market  for  two  hundred,  and  the  written  quota- 
tions received  from  reliable  dealers  were  all  around  $20  each, 
with  the  single  exception  of  one  manufacturer  who  quoted 
$11.75.  This  particular  plant  was  very  hard  hit  by  the  busi- 
ness depression,  and  needed  this  job  rather  badly.  The  pur- 
chasing agent  called  the  salesman  in,  and  told  him  that  he 
would  like  to  give  him  this  order,  because  he  had  served  him 
so  well  in  the  past,  but  that  most  of  the  bids  on  the  job  ran 
about  the  same  figure.  If,  however,  the  salesman  could  see 
his  way  clear  to  cut  his  price  to  $11.25,  he  would  feel  justi- 
fied in  giving  him  the  order. 

The  salesman  cut  the  price,  got  the  order,  and  delivered  the 
goods  promptly.  No  doubt  he  made  a  small  margin  of  profit 
even  at  that  figure. 

Was  the  purchasing  agent  justified   in  making  the   state- 


278     PURCHASING  PRINCIPLES  AND  PRACTICES 

ments  he  did  to  the  salesman?  Was  this  line  of  attack  strictly 
in  accordance  with  good  ethics?  What  is  the  definition  of  a 
lie?  Did  the  purchasing  agent  lie?  Is  a  lie  ever  justified? 
When? 

The  Better-Price  Salesman. — Sooner  or  later  every  pur- 
chasing agent  comes  in  contact  with  the  salesman  who  offers 
to  quote  a  little  better  price  than  his  competitors,  if  the  buyer 
will  only  tell  him  what  that  price  is.  From  asking  for  that 
information  directly,  or  trying  to  get  it  by  indirection,  is 
only  a  step  to  requesting  that  he  be  shown  the  other  man's 
quotation. 

Even  the  most  inexperienced  purchasing  agent  will  not  fall 
for  tactics  of  that  sort  more  than  once,  but  it  is  rather  sur- 
prising how  much  of  that  sort  of  thing  is  done.  In  small  cities 
the  direct  ill  results  of  this  practice  are  not  felt  so  severely  as 
in  the  larger  cities,  but  sooner  or  later  the  result  is  the  same. 
The  purchasing  agent  either  learns  not  to  be  led  astray  by 
these  tactics,  or  he  is  replaced. 

Wholly  aside  from  the  ethical  problem  involved,  the  quiet 
circulation  of  the  word  that  Buyer  X  will  let  the  other  fellow 
know  the  prices  quoted  him  gets  abroad,  and  the  various 
jobbers'  associations  take  steps  to  discipline  the  men  who 
have  been  cutting  prices. 

What  would  you  do  if  a  salesman  in  whom  you  had  great 
confidence  were  to  ask  you  what  one  of  his  competitors  had 
quoted  on  a  given  bill  of  goods?  Would  you  stand  upon  your 
dignity  and  show  him  out  of  the  office?  Would  you  pretend 
that  you  did  not  understand?  Would  you  look  him  in  the  eye 
and  ask  him  if  he  thinks  that  is  the  basis  on  which  you  do 
business?    What  reply  would  you  make? 

The  Carbon  Paper  and  the  Gold  Fountain  Pen. — In  the 
winter  of  1920  many  members  of  the  Purchasing  Agents'  As- 
sociation received  letters  from  an  Eastern  firm  offering  to 
send  them  a  gold-plated  fountain  pen  with  the  first  order  of 
carbon  paper.  This,  they  explained,  was  simply  their  method 
of  giving  the  buyer  the  benefit  of  the  saving  they  effected  by 
having  no  salesmen. 

If,   after  they  had  tried  the   carbon  paper,   they  did   not 

think  theirs  was  the  best  carbon  paper  on  the  market  for  the 

price,  the  buyers  could  return  the  portion  of  the  paper  that 

was  unused,  and  keep  the  fountain  pen  for  their  trouble. 

What  reply  would  you  make  to  that  sort  of  offer?    If  the 


PRACTICAL  PROBLEMS  FOR  SOLUTION     279 

paper  were  really  a  good  value,  Is  there  any  reason  why  you 
should  not  av"all  yourself  of  this  opportunity  to  secure  a  gold- 
plated  fountain  pen  without  cost?  If  you  had  been  buying 
that  brand  of  carbon  paper  for  several  weeks  or  months,  and 
found  it  quite  satisfactory,  what  action  would  you  take  if  the 
jobber  were  to  send  you  a  gold-plated  fountain  pen  with  his 
compliments?  Would  it  make  any  difference  if  he  were  to 
send  you  this  pen  at  Christmas?  If  he  were  to  send  the  pen 
to  your  home  instead  of  to  the  office?  Who  pays  for  the  pen 
in  the  long  run? 

Cigars. — Many  purchasing  agents  receive  enough  cigars  at 
Christmas  time  to  keep  themselves  and  their  friends  well  sup- 
plied for  six  or  eight  months.  Is  that  right?  Who  pays  for 
those  cigars?  Does  it  make  any  difference  what  your  personal 
relations  may  or  may  not  have  been  with  the  firms  that  send 
the  cigars?  If  it  is  right  to  accept  cigars,  why  is  it  not  right 
to  accept  silk  umbrellas?  If  it  is  right  to  accept  $50  worth  of 
cigars  from  a  man  with  whom  you  have  done  a  lot  of  business, 
why  is  it  not  right  to  accept  a  suit  of  clothes  from  the  same 
man,  under  similar  circumstances?  Does  it  make  any  differ- 
ence whether  you  have  placed  a  lot  of  business  with  him,  or 
are  merely  planning  to  place  business  with  him? 

Miscellaneous  Christmas  Gifts. — A  member  of  the  pur- 
chasing Agents'  Association  of  Chicago  said  recently  that  he 
accepted  all  the  gifts  that  were  offered  at  Christmas,  and  then 
went  over  the  list  of  gifts  with  the  general  manager  of  his 
firm,  and  decided  just  what  disposition  to  make  of  each  gift. 
As  a  result  of  this  conference  some  gifts  were  returned,  some 
were  kept  by  the  purchasing  agent,  and  some  were  kept  by 
the  general  manager. 

What  do  you  think  of  that  sort  of  policy?  If  you  do  not 
think  this  is  right,  what  are  the  reasons  for  your  decision? 
What  is  your  policy? 

The  Purchasing  Agent  with  the  Better  Price. — A  pur- 
chasing agent  of  my  acquaintance  informed  me  that  he  had  a 
good  deal  of  success  in  reducing  printing  costs  by  telling  every 
bidder  that  he  had  a  bid  from  a  competitor  that  was  mate- 
rially lower  than  his  bid.  On  a  recent  purchase  the  lowest  bid 
was  $200,  but  he  told  one  of  the  bidders  that  he  had  a  quota- 
tion of  $160,  but  that  he  could  have  the  job  if  he  would  change 
his  bid  to  $150. 

What  is  wrong  with  this  method  of  procedure,  aside  from 


280     PURCHASING  PRINCIPLES  AND  PRACTICES 

the  ethical  point  involved?  What  will  be  the  probable  re- 
sult if  that  practice  is  continued?  In  what  way,  if  any,  does 
this  problem  differ  from  the  problem  concerning  the  tote 
boxes? 

Waste  Paper. — The  purchasing  agent  had  sold  most  of 
his  waste  paper  to  an  old  man  for  the  past  twenty  years.  When 
No.  1  mixed  paper  was  worth  45c  per  hundred,  he  made 
a  verbal  agreement  that  he  would  sell  all  the  waste  paper 
offered  at  that  price  for  six  months.  The  old  man  then  made 
a  contract  to  sell  that  paper  to  one  of  the  box  board  mills  for 
sixty  cents  per  hundred.  After  the  agreement  had  been  in 
effect  for  three  months,  the  box  board  mill  burned  down  and 
the  firm  went  into  the  hands  of  a  receiver.  In  the  meantime 
the  market  price  had  fallen  to  twenty-five  cents  per  hundred, 
and  the  old  man  offered  to  take  the  paper  for  the  rest  of  the 
period  at  twenty-five  cents. 

What  would  you  do?  Let  us  assume  that  you  finally  agree 
to  modify  the  price,  and  the  market  again  drops,  to  fifteen 
cents  per  hundred,  and  the  old  man  again  wants  to  pay  you 
only  the  market  price.  If  the  conditions  had  been  reversed 
and  the  market  had  been  steadily  advancing,  would  you  have 
taken  advantage  of  the  incapacity  of  the  mill,  to  force  a 
higher  price   from  the  paper  collector? 

Paint  Tests. — Let  us  assume  that  your  firm  uses  a  large 
quantity  of  paint  and  varnish.  Your  engineering  department 
has  made  numerous  tests  and  your  line  is  pretty  well  stand- 
ardized. You  are  constantly  bombarded  with  requests  by 
other  firms  to  run  a  test  on  their  paint  or  varnish.  Because  of 
the  time  and  expense  involved  you  can  hardly  afford  to  test 
every  paint  and  varnish  that  is  offered.  If,  however,  you  re- 
fuse to  test  out  any  of  the  new  products  you  may  miss  some- 
thing really  worth  while. 

Let  us  assume  that  your  firm  is  just  completing  a  set  of 
samples,  and  you  arrange  for  the  varnish  firms  each  to  supply 
free  of  charge  enough  of  their  product  to  finish  one  sample. 

Is  there  anything  wrong  in  that?  If  each  sample  were 
a  room,  would  it  be  all  right  to  have  each  salesman  furnish 
enough  material  to  finish  one  room?  Let  us  assume  that  you 
are  in  charge  of  these  tests,  and  are  personally  interested  in 
them.  Let  us  also  assume  that  you  have  just  built  a  home, 
and  are  about  ready  for  the  paint  and  varnish. 

Do  you  think  that  it  would  be  right  to  ask  the  salesman  for 


PRACTICAL  PROBLEMS  FOR  SOLUTION     281 

each  varnish  house  to  furnish  enough  material  to  finish  one 
room?  If  the  salesmen  were  to  request  that  sort  of  a  test, 
would  you  accept? 

Would  you  be  subject  to  criticism  if  you  did  accept,  or  if 
you  refused?  This  is  a  very  nice  question,  and  much  of  the 
success  or  failure  of  many  purchasing  agents  depends  upon 
the  way  in  which  they  have  satisfactorily  solved  problems  of 
this  sort. 

The  Coal  Contract. — In  the  early  spring  of  1921  the  coal 
operators  in  the  southern  Illinois  district  succeeded  in  holding 
the  price  of  all  coal  rather  steady.  The  nominal  price  of 
screenings  was  $2.85  per  ton,  f.o.b.  mines. 

In  the  latter  part  of  May  a  Chicago  purchasing  agent  was 
offered  a  contract  for  Franklin  County  screenings  at  $2.25, 
which  was  then  a  little  below  the  contract  market.  The  lines 
of  authority  in  that  particular  firm  were  such  that  coal  con- 
tracts were  signed  by  the  chairman  of  the  board  of  directors, 
after  the  board  had  formally  authorized  it.  The  purchasing 
agent  merely  recommended  the  contract  to  the  board,  but  was 
always  careful  to  see  that  only  such  contracts  were  recom- 
mended as  would  be  approved.  After  going  over  all  the  fac- 
tors in  the  matter,  the  purchasing  agent  told  the  coal  dealer 
that  he  would  recommend  his  contract.  He  submitted  his 
formal  recommendations,  but  the  action  of  the  board  was  de- 
layed for  ten  days,  and  in  the  meantime  the  contract  market 
had  fallen  fifty  cents  per  ton. 

What  are  the  duties  and  obligations  of  the  purchasing  agent 
under  these  circumstances?  He  has  technically  carried  out  his 
agreement  by  recommending  the  contract  to  the  board  of 
directors.  As  he  is  employed  to  secure  the  best  possible  values 
for  his  firm,  is  he  justified  in  withdrawing  or  modifying  his 
recommendations?  If  he  does  not  withdraw  his  recommenda- 
tions should  he  report  the  farther  fall  in  the  market  to  his 
board?  If  the  market  had  advanced  instead  of  declining, 
what  would  have  been  the  rights  and  obligations  of  the 
vendor? 

Assuming  that  the  net  difference  of  fifty  cents  per  ton 
meant  a  saving  of  $20,000  per  year  to  his  firm,  would  the 
amount  involved  alter  the  decision  that  he  should  reach? 
Would  the  fact  that  even  the  higher  price  meant  that  the  coal 
operator  was  doing  business  at  a  loss  have  any  effect  upon 
your  ultimate  decision? 


282     PURCHASING  PRINCIPLES  AND  PRACTICES 

The  Glycerine  Purchase. — In  the  Spring  of  1920  the  repre- 
sentative of  one  of  the  large  brokerage  houses  with  which  the 
purchasing  agent  had  done  no  business  called,  and  offered 
glycerine  at  six  cents  below  the  market.  The  buyer  gave  him 
an  order  for  a  ton  to  be  delivered  inside  of  two  weeks.  When 
ten  days  had  elapsed,  he  asked  for  delivery  and  received  no 
answer.  During  the  next  thirty  days  numerous  requests  for 
delivery  were  made  but  the  broker  did  not  reply  to  any  of 
them  and  did  not  fill  the  order.  As  the  material  was  urgently 
needed  by  that  time,  the  buyer  got  the  broker  by  long  dis- 
tance and  demanded  the  goods.  The  broker  informed  him 
that  the  salesman  had  made  an  error  in  his  quotation,  and 
that  he  could  not  fill  the  order  at  the  price  quoted. 

The  purchasing  agent  told  the  broker  that  he  would  either 
have  the  goods  inside  of  one  week,  or  he  would  report  the 
transaction  to  the  secretary  of  the  National  Association  of 
Purchasing  Agents.  The  broker  filled  the  order  and  billed  it 
at  the  price  quoted.  Did  the  purchasing  agent  act  within  his 
rights?     How  would  you  have  handled  this  transaction? 

Duplicate  Shipments. — During  the  period  of  mounting 
prices  which  followed  the  armistice  after  the  World  War, 
there  was  a  considerable  disarrangement  of  the  office  forces 
in  many  lines.    This  was  due  to  the  large  turnover  of  the  help. 

The  purchasing  agent  for  an  automobile  concern  had  been 
trying  for  weeks  to  secure  delivery  of  a  lot  of  steel  that  had 
been  bought  before  the  recent  advances  In  price.  Finally  he 
not  only  received  the  shipment  he  had  been  asking  for,  but 
received  also  a  duplicate  shipment.  He  called  the  shipper's 
attention  to  the  duplicate  shipment,  and  offered  to  keep  it  at 
the  same  price.  The  shipper  tried  to  collect  on  the  basis  of 
the  market  for  the  duplicate  shipment. 

What  are  the  rights  and  obligations  of  each?  If  the  ship- 
per had  duplicated  the  shipment  on  a  falling  market,  what 
action  should  the  purchasing  agent  take?  Give  the  reasons 
for  your  decision  In  this  case. 

Envelopes. — In  the  spring  of  1921  the  purchasing  agent 
for  one  of  the  railroads  received  a  requisition  for  the  follow- 
ing envelopes,  size  6j/<  x  9^^  printed:  100  M  with  a  corner 
card,  50  M  with  a  slightly  different  corner  card,  and  15  M 
with  another  minor  change.  The  stock  was  to  be  the  same 
and  the  only  change  was  In  the  last  line  of  the  corner  card. 
The  small  lot  of  envelopes  was  needed  for  a  special  circular 


PRACTICAL  PROBLEMS  FOR  SOLUTION    283 

which  was  to  be  mailed  in  three  weeks.  In  response  to  re- 
quests for  quotations,  the  buyer  received  bids  from  four  re- 
liable firms  which  ranged  from  three  dollars  and  seventy- 
five  cents  to  four  dollars  and  fifty  cents.  Just  as  he  was  about 
to  place  the  order,  the  representative  for  a  firm  with  whom 
he  had  had  no  dealings  called  and  offered  to  supply  a  slightly 
better  stock  for  three  dollars  and  five  cents  per  thousand. 
When  the  question  of  deliveries  came  up  the  salesman  as- 
sured him  that  he  could  have  the  finished  job  in  less  than  two 
weeks.  Because  of  the  fact  that  the  mailing  job  was  not  an 
ordinary  bit  of  routine,  the  purchasing  agent  was  obliged  to 
get  a  special  authorization  from  the  general  manager  to  whom 
he  reported  the  price. 

The  new  firm  was  given  the  order.  After  the  order  had 
been  placed  four  days,  the  new  salesman  reported  that  he  had 
made  an  error  In  quoting  and  that  the  price  should  have  been 
three  dollars  and  thirty  cents  because  of  the  two  changes  in 
the  corner  card.  The  purchasing  agent  explained  that  that 
particular  job  was  covered  by  a  special  appropriation  and  that 
he  would  find  It  embarrassing  to  request  additional  funds  for 
that  job  at  that  late  date  and  asked  him  to  put  it  up  to  his 
firm  to  protect  him.  This  the  salesman  promised  to  do.  At 
the  same  time  he  renewed  his  promises  of  speedy  delivery. 
The  second  day  after  that  the  salesman  again  put  in  his  ap- 
pearance with  the  request  that  he  be  permitted  to  bill  the  en- 
velopes at  the  Increased  price.  The  purchasing  agent  told  him 
that  so  much  time  had  already  been  lost  In  the  transaction  that 
he  seriously  doubted  his  ability  to  keep  his  delivery  promise 
and  that  he  must  either  deliver  at  the  original  price  quoted 
and  deliver  on  time  or  accept  cancellation.  The  salesman 
then  agreed  to  follow  up  the  transaction  personally  and  to  see 
that  the  job  was  delivered  In  time  and  billed  at  the  price  orig- 
inally quoted. 

The  envelopes  were  not  delivered  in  two  weeks,  and  several 
very  definite  promises  were  passed  over,  with  no  excuse  from 
the  salesman.  It  was  finally  necessary  to  purchase  ten  thou- 
sand envelopes  from  a  local  firm  at  a  cost  of  $5  per  thousand. 
In  order  to  get  the  circulars  out  In  time.  When  the  original 
order  for  envelopes  was  delivered,  they  were  billed  not  at 
$3.05  but  at  $3.30. 

Under  these  circumstances  what  would  you  do?  What  de- 
duction, if  any  should  be  made  from  the  bill  covering  the  orig- 


284     PURCHASING  PRINCIPLES  AND  PRACTICES 

inal  lot  of  envelopes?  Would  the  fact  that  any  deductions 
made  were  charged  to  the  drawing  account  of  the  salesman 
have  any  bearing  upon  your  decision?  What  are  your  rights, 
both  legal  and  moral? 

The  Steam  Pump. — Let  us  assume  that  your  firm  is  about 
to  build  a  new  power  plant,  and  that  before  the  plans  were 
quite  ready,  you  found  it  necessary  to  install  a  new  feed  water 
pump  in  the  old  plant.  After  due  consideration  you  decide 
to  purchase  a  pump  from  the  X  Steam  Pump  Co.,  and  to 
have  the  pump  so  planned  that  you  can  use  it  in  the  new 
plant  when  it  is  erected.  The  pump  Is  delivered,  inspected, 
installed,  and  paid  for.  After  being  in  service  for  three 
weeks,  the  water  end  develops  a  leak,  and  your  engineer  finds 
a  blow  hole  in  the  casting.  You  report  the  matter  to  the  X 
Pump  Co.,  and  they  say  they  will  gladly  replace  the  defective 
part  at  any  time  you  request  it.  They  point  out,  however, 
that  the  change  in  the  water  end  will  necessitate  the  shut 
down  of  that  part  of  the  plant  for  nearly  a  week,  that  the 
new  plant  will  be  ready  to  receive  the  pump  in  two  years, 
and  that  the  pump  will  cause  no  further  trouble  where  it  is, 
as  long  as  the  water  pressure  is  not  Increased. 

The  salesman  asks  permission  to  defer  the  installation  of 
the  new  water  end  until  the  pump  is  transferred  to  the  new 
power  house  two  years  later.  He  acknowledges  his  obliga- 
tion, and  that  of  his  firm  to  replace  the  defective  part,  but 
asks  to  be  relieved  of  the  apparently  unnecessary  expense  at 
that  time. 

If  the  firm  is  perfectly  reliable  what  action  will  you  take? 
You  might  of  course  have  the  new  part  shipped,  and  hold  it 
until  you  are  ready  to  install  it,  but  this  Is  a  very  heavy  cast- 
ing, and  will  be  very  much  in  the  way  for  two  years.  In  addi- 
tion to  that,  something  may  happen  to  It  while  you  have  it  in 
storage,  and  you  will  then  have  no  recourse. 

The  Scrap  Iron  Contract. — The  buyer  for  the  X  Foundry 
Co.  entered  Into  a  contract  to  purchase  forty  cars  of 
scrap  iron  of  certain  specifications  at  the  rate  of  five  per  week 
for  eight  weeks.  This  contract  was  placed  at  the  market  price. 
Part  of  the  material  shipped  on  this  order  had  not  been  quite 
up  to  specifications,  but  because  of  the  great  shortage  of 
scrap,  the  slight  variations  from  specifications  were  over- 
looked. 

The  market  broke  sharply,  and  the  purchasing  agent  re- 


PRACTICAL  PROBLEMS  FOR  SOLUTION    285 

fused  two  cars  of  scrap  because  they  were  not  up  to  specifica- 
tions. The  vendor  offered  to  replace  these  two  cars  v/ith  iron 
that  was  up  to  grade,  but  the  purchasing  agent  took  the  posi- 
tion that  since  the  vendor  had  had  every  opportunity  to  ship 
scrap  iron  of  the  grade  specified,  and  that  since  the  material 
shipped  was  not  up  to  specifications,  he  was  under  no  obliga- 
tions to  accept  a  replacement  shipment.  In  the  meantime, 
while  the  matter  was  being  argued,  the  price  of  scrap  iron  had 
dropped  to  less  than  half  the  former  price.  Under  these  cir- 
cumstances was  the  purchasing  agent  within  his  rights  in  re- 
fusing the  replacement  shipment? 

If  the  vendor  sues,  can  he  force  him  to  take  the  replacement 
shipment  or  can  he  collect  damages?  What  effect,  if  any, 
would  it  have  if  the  vendor  had  or  had  not  contracted  for  the 
scrap  iron,  or  if  he  was  following  the  market  and  would 
profit  greatly  by  replacing  the  shipment  at  the  contract  price? 

Cotton  Yam. — In  the  spring  of  1920  there  was  a  great 
shortage  of  materials  of  all  kinds,  and  many  manufacturers 
found  it  necessary  to  pro-rate  their  product  among  their  var- 
ious customers.  A  textile  manufacturer  had  purchased  most 
of  their  cotton  yarn  from  one  firm  ever  since  they  had  started 
in  business.  At  the  beginning  of  each  quarter  of  the  past  year 
and  a  half  the  vendor  had  told  them  how  much  cotton  yarn 
they  could  spare  them.  Their  allotment  had  been  about  20,- 
000  pounds  per  quarter.  In  the  spring  of  1920  the  vendor 
announced  a  stiff  advance  in  price,  and  told  the  textile  mill 
that  they  had  found  it  possible  to  increase  their  allotment  to 
50,000  pounds  for  the  next  quarter.  If  they  wanted  that 
amount,  they  must  notify  them  in  five  days.  After  consulting 
the  directors  of  the  firm,  the  textile  manufacturer  decided  to 
accept  the  whole  allotment.  The  quarter  had  barely  begun 
when  the  price  of  cotton  yarns  of  all  kinds  broke  sharply. 

Raw  cotton  of  the  grade  used  dropped  75c  per  pound,  and 
the  finished  yarn  dropped  from  $4.50  per  pound  to  $2.50  per 
pound.  The  vendor  of  cotton  yarn  refused  to  take  a  reduc- 
tion in  price,  and  refused  to  cancel  the  remainder  of  yarn  still 
on  order. 

What  action  would  you  take  if  you  were  the  purchasing 
agent  for  that  firm,  and  the  contract  had  been  made  by  you, 
after  consultation  with  the  members  of  the  firm? 

The  Supply  List. — The  purchasing  agent  for  one  of  the 
Chicago   department   stores  sent   out   a    ten-page   inquiry   to 


286     PURCHASING  PRINCIPLES  AND  PRACTICES 

manufacturers  of  cartons.  The  items  on  the  list  were  not 
special,  and  could  have  been  picked  up  from  any  one  of  several 
local  jobbers.  Because  of  a  trade  agreement  which  one  of  the 
manufacturers  had  with  the  dealers,  the  Chicago  representa- 
tive informed  the  jobber  that  the  factory  was  bidding  on  that 
list  direct,  and  that  he  knew  that  his  competitors  were  bidding 
direct.  The  jobber  then  called  the  buyer  for  the  department 
store  and  asked  permission  to  bid  on  the  list. 

What  action  should  the  buyer  take  on  that  request?  It  is 
quite  possible  that  the  jobber  has  on  hand  stock  that  he  wants 
to  get  rid  of,  and  that  he  may  be  in  a  position  to  underbid  the 
manufacturer  on  some  items.  Is  it  advisable  to  submit  re- 
quests for  quotations  to  both  manufacturers  and  jobbers  at 
the  same  time?     Why? 

The  Automobile  Tire  Purchase. — The  purchasing  agent 
for  one  of  the  smaller  automobile  manufacturers  in  Detroit 
was  limited  to  the  purchase  of  one  make  of  automobile  tire 
for  the  larger  part  of  his  requirements.  The  manufacturer  of 
the  tires  had  adopted  the  policy  of  protecting  the  jobber.  He 
would  sell  the  automobile  manufacturer  direct,  but  at  the  same 
price  that  the  jobbers  charged.  His  line  was  handled  by  sev- 
eral jobbers  in  town.  As  buying  from  the  tire  manufacturer 
meant  delays  and  added  freight  charges,  and  resulted  in  no 
saving,  the  purchasing  agent  bought  most  of  his  tires  from  one 
or  more  of  the  local  jobbers.  In  order  to  cut  expenses,  the 
purchasing  agent  proposed  to  one  of  the  local  jobbers  that  he 
give  him  all  the  business,  in  return  for  a  rebate  in  the  form  of 
a  credit  memorandum  at  the  end  of  each  quarter. 

The  representative  for  one  of  the  other  jobbers  noticed 
that  they  were  not  getting  any  more  tire  orders  from  this  tire 
manufacturer,  and  tried  to  find  out  what  was  the  cause  for 
this  change.  They  finally  managed  to  find  out  through  one 
of  the  clerks  in  the  purchasing  department  that  each  quarter 
the  other  tire  jobber  sent  to  the  purchasing  agent  a  credit 
memorandum,  with  no  explanation  as  to  the  reason  for  its 
being  issued.  The  jobber  reported  this  matter  to  the  tire 
manufacturer,  and  the  rebating  jobber  lost  his  agency.  The 
jobber  who  had  reported  the  matter  to  the  tire  manufacturer 
then  tried  to  secure  the  bulk  of  his  tire  business  again. 

What  action  should  the  purchasing  agent  take?  If  there 
had  originally  been  only  two  jobbers  in  town  and  one  of  them 
was  now  eliminated,  should  the  purchasing  agent  let  the  job- 


PRACTICAL  PROBLEMS  FOR  SOLUTION    287 

ber  profit  by  his  action  In  reporting  the  rebate  to  the  manu- 
facturer? If  It  Is  going  to  be  very  Inconvenient  to  purchase 
these  tires  out  of  town  from  other  jobbers,  Is  he  warranted  In 
putting  his  organization  to  that  additional  trouble  and 
expense. 

The  Motor  Car. — In  the  spring  of  1921  the  X  Motor  Car 
agencies  In  the  larger  cities,  acting  under  Instructions  from  the 
home  office,  established  separate  clearing  houses  to  handle  all 
old  cars  that  were  turned  In.  All  appraisals  were  made  by  the 
representative  of  this  central  clearing  house,  and  his  apprais- 
als were  final.  The  purchasing  agent  for  one  of  the  larger 
hospitals  in  Chicago  decided  to  turn  In  a  coupe  for  a  new  one, 
and  secured  an  appropriation  of  $300  for  the  transaction. 
When  the  estimator  for  the  clearing  house  looked  over  the 
old  car,  he  told  the  purchasing  agent  that  it  would  cost  him 
$375  to  make  the  trade.  The  purchasing  agent  was  confi- 
dent that  the  old  car  could  be  sold  for  at  least  $75  more  than 
the  agency  would  allow.  He  therefore  put  It  up  to  the 
salesman  for  the  X  agency  to  find  for  him  a  buyer  for  the 
old  car  at  a  price  that  was  $75  more  than  the  price  the 
agency  would  allow.  The  salesman  did  this,  and  the  old  car 
was  sold  for  cash,  but  the  salesman  lost  his  job,  because  it  was 
contrary  to  the  rules  of  the  X  business  In  Chicago  to  help  a 
customer  sell  his  old  car  for  more  than  the  clearing  house 
would  allow  him.  Moreover,  It  was  contrary  to  the  regula- 
tions for  a  new-car  salesman  to  deal  in  old  cars. 

What  action  should  the  purchasing  agent  take  In  this  mat- 
ter?   Why? 

Rubber  Stoppers. — The  buyer  for  a  large  Institution 
bought  a  good  many  rubber  stoppers  of  certain  specifications. 
These  had  been  purchased  from  one  of  two  or  three  manu- 
facturers. It  was,  however,  necessary  to  occasionally  pick  up 
small  lots  from  a  jobber  in  order  to  keep  up  the  assortment. 
The  price  at  this  time  was  about  80c  per  pound  from  the 
manufacturer,  and  the  jobbers  charged  $1  to  $1.25  for  the 
small  lots  picked  up.  Two  new  factories  are  opened  up,  and 
the  purchasing  agent  sends  both  of  them  copies  of  his  next 
inquiry  list.  Since  the  last  purchase,  the  cost  of  all  the  mate- 
rials entering  into  the  manufacture  of  the  stoppers  has  greatly 
declined.  The  purchasing  agent  expects  to  buy  the  next  lot 
of  stoppers  for  about  70c  per  pound.  When  the  quotations 
are  received,  he  finds  that  the  manufacturers  he  has  been  deal- 


288     PURCHASING  PRINCIPLES  AND  PRACTICES 

Ing  with  quote  the  same  prices  as  before — 80c  per  pound. 
One  of  the  new  manufacturers  quotes  85c,  and  the  other 
quotes  6Sc.  The  second  day  after  the  quotations  are  in,  and 
just  after  the  order  has  gone  to  the  manufacturer  who  has 
quoted  65c,  the  sales  manager  withdraws  his  price  and  quotes 
80c  per  pound.  The  purchasing  agent  telephones  the  sales 
manager  and  by  carefully  wording  his  questions,  learns  that 
the  change  In  price  has  been  made  because  one  of  the  job- 
bers that  had  occasionally  served  the  institution's  needs  for 
small  fill-in  orders  at  a  high  price  had  accidentally  learned  of 
the  65c  quotation,  and  had  complained. 

What  action  should  the  purchasing  agent  take  in  this 
matter? 

The  Overshipments  of  Coal. — In  the  summer  of  1921  soft 
coal  screenings  were  a  drug  on  the  market.  The  purchasing 
agent  for  a  large  industrial  plant  purchased  one  hundred  tons 
of  screenings  at  $4.75  and  three  hundred  tons  at  $4.50  from 
the  same  firm.  This  price  was  for  waggon  deliveries.  Because 
the  market  was  soft,  he  specified  that  on  neither  order  should 
the  quantity  vary  more  than  five  percent.  It  so  happened 
that  the  vendor  was  delivering  other  coal  on  contract,  and  the 
purchasing  agent  had  not  the  facilities  for  the  continuous  and 
Im.mediate  check  of  the  amounts  of  coal  delivered.  When  the 
bills  came  In,  he  found  that  the  order  for  three  hundred  tons 
had  been  overshlpped  just  five  percent.,  and  the  order  for  one 
hundred  tons  had  been  overshlpped  over  forty  per  cent.  At 
about  that  time  the  purchasing  agent  had  purchased  one  car 
of  screenings  from  the  same  district  for  $4.27  per  ton  de- 
livered. He  therefore  refused  to  pay  the  vendor  more  than 
$4.27  per  ton  for  the  forty  tons  overshlpped. 

Is  the  buyer  justified  in  this  stand?  What  would  you  have 
done?  And  why?  Would  the  previous  service  rendered  by 
that  firm  have  any  bearing  on  your  decision?  If  the  firm 
really  wants  to  do  the  fair  and  right  thing,  will  they  be  apt 
to  object  to  this  settlement? 

The  Salesman  Who  Lied. — The  salesman  for  a  hardware 
jobber  with  whom  the  purchasing  agent  had  never  done  any 
business  made  a  very  low  quotation  on  files.  The  purchasing 
agent  gave  him  an  order  for  a  hundred  dozen.  Three  days 
later  the  salesman  called,  and  said  that  he  had  made  a  mistake 
In  the  quotation,  and  asked  permission  to  Increase  the  price. 
His  new  price  was  just  a  bit  higher  than  the  next  lowest  bid- 


PRACTICAL  PROBLEMS  FOR  SOLUTION    289 

der.  The  purchasing  agent  told  him  that  he  would  not  feel 
justified  in  giving  him  the  business  at  that  figure,  and  that  he 
could  consider  the  order  cancelled  if  he  did  not  want  to  fill 
the  order  at  the  price  first  quoted.  The  salesman  then  agreed 
to  fill  the  order  at  the  first  price,  and  to  see  that  there  was  no 
further  delay.  When  the  shipment  was  due,  the  salesman 
promised  to  have  it  there  three  days  later.  When  the  three 
days  was  up,  the  salesman  again  appeared  with  promises,  but 
no  files.  The  firm  had  shipped  the  wrong  stock  number,  he 
said,  and  the  shipment  had  been  returned.  Because  the  ship- 
ment was  so  long  in  coming,  the  buyer  had  to  pick  up  several 
dozen  files  at  a  much  higher  price,  and  the  salesman  agreed 
to  pay  the  extra  cost. 

Quality  Right,  Billing  Wrong. — When  the  order  was  fin- 
ally delivered,  the  files  were  of  excellent  quality,  but  they 
were  billed,  not  at  the  price  quoted,  but  at  the  higher  price. 
Through  a  clerical  error  the  bill  was  paid,  and  the  purchasing 
agent  wrote  the  firm  for  a  credit  memorandum  for  the 
amount  of  the  overcharge,  plus  the  amount  of  the  extra  cost 
on  the  files  picked  up.  The  president  of  the  firm  refused  to 
back  up  the  promises  of  the  salesman,  and  refused  to  settle 
the  claim.  The  purchasing  agent  threatened  to  report  the 
transaction  to  the  secretary  of  the  National  Association  of 
Purchasing  Agents  if  the  claim  was  not  settled  at  once.  The 
salesman  then  came  out,  and  said  that  if  the  purchasing  agent 
pressed  the  claim,  he  w'ould  not  only  have  to  pay  it  himself, 
but  that  he  would  probably  lose  his  position. 

Under  these  circumstances,  is  the  purchasing  agent  justified 
in  pressing  the  claim?  Is  he  justified  in  failing  to  press  the 
claim  when  his  own  firm  is  entitled  to  the  refund?  What 
would  you  have  done  under  these  circumstances?     Why? 

The  Machinery  Purchase. — The  purchasing  agent  for  one 
of  the  large  hotel  supply  houses  of  Chicago  sent  out  a  request 
for  quotations  on  a  small  mortising  machine  of  a  certain  kind. 
This  machine  was  distributed  through  jobbers,  and  the  resale 
price  was  controlled  by  the  manufacturer.  The  resale  price 
Vv'as  $90.  One  firm  quoted  $48,  the  order  was  placed  on 
that  basis,  and  the  vendor  acknowledged  the  receipt  of  the 
order  quoting  the  price.  When  the  machine  was  receiv^ed, 
the  purchasing  agent  found  that  the  vendor  had  shipped  a 
machine  of  inferior  quality,  manufactured  under  a  different 
name.     The  purchasing  agent  asked  the  salesman  to  pick  up 


290     PURCHASING  PRINCIPLES  AND  PRACTICES 

that  machine,  and  ship  the  machine  ordered.  The  salesman 
said  he  thought  he  had  shipped  the  machine  the  buyer  wanted, 
and  the  other  machine  could  not  be  furnished  at  the  $48  price. 

The  purchasing  agent  showed  from  his  files  that  the  order 
called  for  the  more  expensive  machine,  and  that  the  formal 
acknowledgment  of  the  order  specified  the  more  expensive 
machine.  The  salesman  then  flatly  refused  either  to  ship  the 
more  expensive  machine,  or  to  accept  for  credit  the  inferior 
machine. 

What  action  should  the  purchasing  agent  take  in  a  case  of 
this  kind?  Is  he  justified  in  insisting  upon  the  shipment  of 
the  $90  machine  at  the  $48  price?  Would  the  attitude  of 
the  salesman  have  anything  to  do  with  the  decision  that  you 
would  reach?  Does  the  personal  attitude  of  the  salesman 
toward  the  purchasing  agent  alter  the  facts,  or  have  they  any 
real  bearing  upon  the  rights  of  the  purchasing  agent  or  the 
justice  of  the  claim  of  either  party? 

The  Paint  Salesman. — The  salesman  representing  a  well 
established  firm  in  the  Middle  West  had  been  trying  for  sev- 
eral years  to  get  the  buyer  for  a  State  institution  to  use  his 
particular  brand  of  white  enamel.  For  some  reason  he  never 
could  get  very  far  with  that  particular  purchasing  agent. 
Finally,  he  came  to  him  with  the  following  proposition:  "I 
know  that  my  white  enamel  is  the  best  enamel  on  the  market 
at  any  price,  and  I  know  that  it  will  stand  any  test  that  the 
enamel  you  are  now  using  will  stand,  and  I  know  that  it  will 
cost  less  per  gallon,  and  will  cover  25  percent,  more  surface. 

"I  am  so  certain  of  this  that  I  am  willing  to  go  to  almost 
any  length  to  demonstrate  the  facts,  and  will  spend  any  amount 
within  reason  to  prove  to  you  that  my  claims  are  true.  I  am 
willing  to  ship  as  many  barrels  of  this  material  as  you  care  to 
order,  with  the  understanding  that  you  put  this  enamel  to  any 
test  you  like  In  any  way  you  like.  If  it  does  not  do  all  I  claim 
that  it  will  do,  we  will  make  you  a  present  of  all  the  enamel  in 
the  shipment,  and  no  bill  will  be  sent  you  until  you  ask  us  to 
send  it  to  you." 

The  purchasing  agent  said  that  he  would  accept  this  offer,  if 
the  salesman  would  put  that  proposition  in  writing,  and  if  he 
would  specifically  state  his  claim  that  his  enamel  would  cover 
25  percent,  more  surface  than  the  enamel  that  he  was  then 
using.  The  document  was  drawn  up,  the  purchasing  agent 
had  the  head  painter  conduct  the  tests,  and  the  report  was 


PRACTICAL  PROBLEMS  FOR  SOLUTION    291 

that  the  old  enamel  covered  nearly  as  much  surface  as  the  new 
enamel.  The  purchasing  agent  had  ordered  enough  enamel 
to  last  nearly  a  year,  and  refused  to  pay  for  it.  In  addition  to 
that,  he  turned  over  to  the  representative  of  the  firm  that  had 
been  supplying  him  enamel,  the  signed  statement  of  the  sales- 
man for  the  new  company,  and  the  old  company  sued  the  new 
company  for  libel.  What  do  you  think  about  the  ethics 
of  this  sort  of  transaction? 

Soap. — One  of  the  large  soap  manufacturing  plants  in  Chi- 
cago had  a  trade  agreement  with  the  Chicago  jobbers  not  to 
sell  to  any  Chicago  firm  direct.  All  inquiries  for  soap  coming 
from  any  Chicago  customer  were  to  be  referred  to  one  of  the 
Chicago  jobbers.  This  manufacturer  did,  however,  sell  soap 
direct  to  out-of-town  dealers.  The  purchasing  agent  for  a 
plant  in  Chicago  with  out-of-town  branches,  discovered  that 
he  could  buy  this  soap  and  have  it  shipped  to  Duluth  for  less 
than  he  could  have  it  delivered  in  Chicago.  It  so  happened 
that  this  firm  operated  a  fleet  of  boats  between  Duluth  and 
Chicago.  The  purchasing  agent,  therefore,  had  all  soap  for 
Chicago  marked  for  shipment  to  Duluth,  and  delivered  to  the 
docks.  He  then  had  the  city  waggon  pick  up  these  ship- 
ments, and  deliver  them  to  the  Chicago  factory.  In  this  way 
he  saved  the  commission  of  the  Chicago  jobbers  and  mate- 
rially reduced  the  cost  of  the  soap  at  the  Chicago  plant. 

Is  this  ethical?  What  would  you  do  if  you  were  a  Chicago 
jobber  and  inadvertently  found  out  what  was  going  on? 
Would  you  be  justified  in  threatening  to  drop  the  line  of  the 
manufacturer  if  he  did  not  discontinue  this  practice?  What 
right  has  the  jobber  to  take  toll  from  the  Chicago  manufac- 
turer when  he  can  secure  his  soap  direct  from  the  factory  more 
quickly,  and  at  less  expense  without  his  intervention? 

The  Plumbing  Supplies. — Certain  manufacturers  of  plumb- 
ing goods  had  a  trade  agreement  with  the  plumbers  that  they 
would  give  the  plumbers  25  percent,  discount,  and  any  goods 
that  were  sold  direct  to  the  consumer  would  be  sold  at  list 
price.  The  plumbers  had  things  arranged  so  that  all  the 
materials  they  sold  for  the  manufacturers  must  be  installed 
by  them,  and  that  none  but  union  men  could  handle  the  job 
from  start  to  finish.  The  purchasing  agent  for  one  of  the 
large  manufacturers  in  the  Middle  West  made  an  arrange- 
ment with  one  of  the  manufacturers  of  plumbing  materials 
whereby  he  got  a  discount  of  20  percent,  and  the  material 


292     PURCHASING  PRINCIPLES  AND  PRACTICES 

was  all  billed  by  the  manufacturer  in  the  name  of  a  local 
plumber,  who  merely  lent  his  name  to  the  transaction,  in 
return  for  the  extra  5  percent,  commission. 

Is  this  ethical?  Is  this  the  sort  of  arrangement  that  you 
would  sanction,  if  you  were  the  president  of  the  firm  employ- 
ing the  purchasing  agent  who  made  this  arrangement? 

The  Defective  Casting. — The  purchasing  agent  for  a  Nev/ 
York  manufacturer  ordered  a  cast  steel  ring  for  the  idlers  on 
the  outside  of  a  paint  mixer,  at  a  cost  of  $150.  Of  this,  $120 
was  for  the  casting,  and  $30  for  machine  work  to  be  done 
outside,  and  included  in  the  bill  from  the  foundry.  The  order 
specifically  stated  that  this  must  be  a  steel  casting,  and  gave 
the  finished  size.  In  shipping  the  pattern,  however,  the  ship- 
ping clerk  shipped  a  pattern  designed  for  a  gray  iron  casting. 
As  a  steel  casting  shrinks  nearly  twice  as  much  as  a  gray  iron 
casting,  the  finished  ring  was  too  small,  and  had  to  be  dis- 
carded. If  the  shipping  clerk  had  sent  the  right  pattern,  the 
finished  casting  would  have  been  accepted.  If  the  foundry 
had  carefully  checked  the  dimensions  of  the  pattern  with  the 
specifications  on  the  order,  the  error  would  have  been  de- 
tected before  the  casting  was  made. 

As  soon  as  the  purchasing  agent  learned  of  the  diflSculty,  he 
examined  the  casting  carefully,  and  found  two  or  three  blow- 
holes. These  blow-holes  were  not  large  enough  to  have 
caused  the  rejection  of  the  casting  under  other  circumstances, 
but  served  as  an  excuse  for  the  rejection.  The  casting  was 
rejected  and  the  order  cancelled.  A  new  soft  gray  iron  cast- 
ing was  ordered  from  another  foundry,  because  they  could 
not  wait  for  another  steel  casting.  The  foundry  fought  the 
claim,  but  finally  allowed  the  invoice  to  be  cancelled. 

How  would  you  have  handled  this  adjustment?  Why  not 
lay  all  the  cards  on  the  table  and  assume  at  least  part  of  the 
cost  of  the  spoiled  casting? 


INDEX 


Accounts  payable,  record,  20,  71 

Advertising,   156 

Alloys,  171,  218 

American  decimal  standard,  127 

Analysis,   coal,   191,   194 

Ash,  fusing  point,  187 

Association  of  American  Colleges,  262 

Automobile   tires,    145,   287 


B 


Bank  letters,  6 
Better-price  salesman,  279 
Bibliography, 

budget,   98 
coal,   192 

lubrication,   4 

lumber,   114 

paper,   138 

steel,  219 
Bids,  confidential,  40 
Billboards,  163 
Blast  furnace,  213 
Brands,  paper,   128 
Brass,  165 
Business  cycles,   12 
Budget,   94 
Buyers,  fussy,  27 

grouchy,  26 
Buying  by  specification,   75 
Buying,  advertising,   156 

coal,   183 

machinery,  174 

steel,  207 
By-products,  246 


Campaign,   preparation   of,    159 

Canvass,   162 

Carbon,  217 

Carbon   papers,   87,   279 

Cash  discount,  23 

Catalogues,  63-65 

Central    Council    of    Social    Agencies, 

269 
Chairs,  89 
Chemical  tests,  135 
Chicago  Elevated,  225 
Chief  clerk,  value  of,  29 


Christmas  gifts,  280 
Cigars,  280 
Cinders,  hauling,   277 
Classification  of  scrap,  253 
Coal,  183 

analysis,  194 

bibliography,  192 

contracts,  282 

deterioration,  204 

pile  fires,  203 

storing,  200 
Commonwealth      Edison       Company's 

system,  51 
Confidential  bids,  40 
Contracts   for   scrap,   249 
Control  of  stock  purchases,   100 
Co-operation,   68 
Co-operative  buying,  262 
Co-ordinated   purchase    machine,   31 
Copper,  165 
Costs,  89,  170 
Cotton  yarn,  286 
Coupon,  161 
Creamery  supplies,  139 
Credits,    relation   to,   67 
Current  literature,  how  to  find,  5 
Customs,   paper  trade,   136 

D 

Deca}',    in    wood,    113 

Deckle  edge,  122 

Defective  castings,  293 

Department,  production,  relation  to,  66 

Desks,  88 

Detail,  importance  of,  30 

Deterioration    of  coal,    204 

Director  of  purchases,  72 

Disinfectants,  275 

Duplicate  shipments,  283 

E 
Education,  33 
Electric  steel,  216 
Enthusiasm,  capitalized,   32 
Envelopes,  283 

Equipment  of  paper  buyer,  117 
Ethics,  37 
Even   temper,   essential,    34 


293 


294 


INDEX 


Family  worries,  31 

Files,  23 

Fires,  coal  pile,  203 

Fluxes,  210 

Follow  up,  22 

Forms,  49,  51,  52-62,  90,  105-110 

must  fit  the  job,  42 
Foundry  supplies,  222 
Freight  rates,  185 
Friendliness,    34 
Fuel,  for  steel,  209 
Function  of  specifications,  74 


Gambling,  in  commodities,  11 

Gifts,  21 

"Goodfellow,"   the,  28 

Graft,  21 

Guesswork,  eliminated,  96 

H 

Heat,  conductivity,  152 


Inforniation,  sources  of,  4,  5,  6 
Inside  information,  39 
Inspections,  79 
Integrity,  33 
Inventory,  control,  100 
perpetual,   18 


Laboratory  tests,    151 
Library,  how  to  use,  3 
Lubrication,  bibliography,  4 
Lumber,  111 

bibliography,  114 

M 
Machinery,  mine,   174 

purchase  of,  290 
Money,  losing,  155 
Motor  car,  the,  288 
Moulding  sands,  222 


Nostrums.  273 


N 


O 


Office  equipment,  86 
Office  supplies,  42 
Order  index,  48 
Overbuying,  96 
Overshipment,   289 


Paper,  116 

bibliography,  138 

testing,   132 

towels,  278 
Paint,  testing,  76,  281 
Pens  and  inks,   87 
Perpetual   inventories,   18 
Personnel,   66 

Physical  equipment,  importance  of,  82 
Pig  iron,  210 
Plumbing  supplies,  292 
Preparing  campaign,  159 
Prices,  theory  of,  9 
Printing,  purchase  of,  90 
Problems,  277 

Production  department,  relation  to,  66 
Production,  paper,  116 
Pulp,   118,   119 
Purchase  schedule,  18 

Q 

Qualifications  for  success,  33 
Quality  right,  billing  wrong,  290 
Quotation,  forms,  42 

R 

Reasons  for  a  purchase,  25 
Receiving,  228 

Reciprocity,  advantages  of,  72 
Reclaiming  lumber,  248 
Recommendations,   92 
Record,  accounts  payable,  20 
Relation  to,  credits,  67 

factory   superintendent,    67 

sales,  72 
Responsibility',  69 
Return  goods  notice,  238 
Routine,  at  University  of  Chicago,  98 
Rubber,   146 

stoppers,  288 

s 

Sales,  relation  to,  72 
Salvage,  244 
Sampling,    coal,    188 
Scale,  steel,   216 
Scrap  iron  contracts,  285 
Scrap  material,  231 
Shoddy,  152 
Sizes,  paper,  126-127 


INDEX 


29: 


Soap,  292 

Space,  advertising,  buying,  157 

Specifications,  buying  by,  75 

drafting  of,  74 

function  of,  74 

lumber,  112 

mine  machineiv.  177 
Standardization,  91 
Standardizing  forms,   143 
Steam  coal  buying,  183 
Steam  pump,  285 
Steel,   bibliography,   219 

buying,  207 

prices  of,  9 
Stock  balance,  84 
Storage,   coal,  184 
Storekeeper's  order,  227 
Stores,   81 

Stores  and  purchasing,  70 
Storing  coal,  200 
Structural  changes  in   steel,  217 
Success,  measu'e  of,   36 
Superintendent,  relation  to,   67 
Su'ift  &  Company's  system,    43 


System,   Commonwealth   Edison   Com- 
pany's, 51 
Swift  k  Company's.  43 
Wilson  &  Company's,  45 

T 

Tests,  150 

importance  of,  78 

paint,  76 

paper,  132 
Textiles,  150 
Tires,    145 

Ton,  long  and  short,  187 
Tote  boxes,  278 
Traveling  storekeeper,  231 
Tubes,  copper,   171 
Typical  purchasing  department,  15 

W 

Waste,  checking,  88 

paper,  281 
Wilson  &  Company's  system,  45 
Wire  drawing,  168 
Worker's  viewpoint,  41 


X 


0 


p' 


1/ 


L  005  280  724  5 


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